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The writer is president and chief executive of the American Investment Council
The US serves as a prominent hub for global investment and innovation, with private equity playing a crucial role in the growth of successful businesses that employ millions of people and provide strong returns for retirees. Notably, around 85% of private equity investments support small businesses with fewer than 500 employees.
Unfortunately, the current regulatory agenda of the Biden administration poses a threat to this system, which supports workers and small businesses across the US. Lina Khan, chair of the Federal Trade Commission, has exploited a healthcare case to attack private equity, driven by a radical antitrust theory.
In reality, the “buy and build” model employed by some private equity firms enhances competition and expands access to healthcare services in a highly fragmented and cost-intensive industry. Studies demonstrate that private equity-backed hospitals achieve higher quality standards, ultimately leading to improved care for patients. Furthermore, private equity has been filling critical gaps in the US healthcare system for decades by providing essential resources for doctors, nurses, and hospitals to deliver high-quality care to patients.
I have recently received feedback from both small business owners and healthcare professionals, all attesting to the positive outcomes driven by private investments for their businesses, employees, and communities.
For instance, Chase Begor, the founder and CEO of Otter Learning, shared how private investment enabled his early childhood education company to offer better benefits such as improved health insurance and retirement security to their employees. As a result, teachers at Otter Learning can focus on providing a higher quality education experience for their students.
Unfortunately, officials like Khan fail to recognize this reality. By attempting to redefine federal antitrust law and deviate from the “consumer welfare” standard that has long assessed conduct and investment based on its benefits to American consumers, she will only impede economic growth.
In recent months, the FTC has suffered numerous defeats in high-profile court cases. According to Anthony Sabino, a professor of business and law at St. John’s University, Khan’s attempt to abruptly change a century’s worth of antitrust law is unwise.
The FTC’s recently proposed merger guidelines and pre-merger notification filing requirements have sparked widespread criticism. These measures aim to restrict business capital flow to the US, negatively impacting the economy without clear objectives. Experts like Lawrence Summers, former US Treasury secretary and director of the National Economic Council, argue that these approaches resemble a war on business and pose substantial risks to consumers and healthy markets.
Economists and former government officials also contend that the proposed merger guidelines disregard established economic principles and rely on outdated case law. The guidelines should not turn into a debatable legal brief or a political tool.
Private equity has directly supported 12 million jobs and made investments in over 44,000 American businesses since 2017. Over 34 million public servants rely on private equity for their retirements, and it consistently delivers the highest returns among all asset classes for public pensions.
Our fragile economy cannot withstand a government power grab that obstructs critical access to capital. Critics of private equity fail to grasp that hindering industries from investing will stifle the growth, scalability, innovation, and hiring capacity of America’s small businesses, which serve as the lifeblood of the economy.
Existing rules, laws, and regulations already safeguard the private equity industry. Imposing baseless antitrust theories will only harm businesses, workers, and retirees across the nation. Instead of threatening the very investments that foster competitive markets, we should encourage more partnerships that benefit consumers, workers, entrepreneurs, retirees, doctors, and nurses.
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