PE 'roll-ups' merit Article 22 scrutiny, says Dutch agency head - Keystone Brussels

Jacob Parry
02 March 2023

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тRoll-upт acquisition strategies by private equity firms should be subject to greater scrutiny from competition authorities and could potentially be a matter for referral under Article 22, the head of the Dutch competition authority said at an event in Brussels today.

Strategies whereby private equity firms buy "relatively small" players in regional, local or national markets in order to gain market power in a geographic market merit the attention of agencies, said Martijn Snoep, head of the Autoritet Consument en Markt (ACM) at Keystone's inaugural antitrust conference.

Snoep said that such "roll-up" strategies, whereby investors acquire majority stakes in a series of small firms, are a "new" phenomenon that has arisen in many countries.

The agency head warned such acquisitions of small local or regional firms often remain below the threshold for filing. To that end, the ACM fully supports the view of the European Commission (EC) on the ‘Dutch clause', or Article 22 of the EU Merger Regulation that allows national agencies to ask the EC to investigate transactions that do not meet national thresholds.

Snoep said that a further concern regarding such PE acquisitions concerns the substantive test that agencies must apply. As such transactions are incremental - only adding a very small market share - they may not individually pose concerns.

He said that the ACM was in favour of taking a broad perspective, adding that if the burden of signficance is too high, then dominant players could get a monopoly.

At the OECD last week, the head of the Australian competition authority said that private equity minority stakes in competing companies are an issue that competition authorities should have on their radar.