The US Federal Trade Commission has published the results of its investigation into small takeovers by big tech companies. It found that a significant number of the deals analysed would have required a full review by the competition watchdog if certain loopholes did not apply or debt and deferred payments were included in the acquisition price. FTC chair Lina Khan said the regulator will look at whether the process for vetting takeovers needs changes.
The investigation was launched in February 2020, focusing on acquisitions by Facebook, Alphabet, Microsoft, Apple and Amazon that did not meet the criteria for full FTC review. In total, the FTC evaluated 616 takeovers by the companies in the period 2010-19.
Of the total, 94 exceeded the minimum value requirement for FTC review, but managed to avoid scrutiny due to various regulatory loopholes and exemptions. Another three would have exceeded the asset threshold if acquired debt was added to the purchase price, and nine more deals would have faced FTC review if deferred or contingent payments were included in the total price.
The FTC already decided in August to start taking debt into consideration more when deciding on takeovers. Khan said the work would continue, "to identify areas where the FTC may have created loopholes that are unjustifiably enabling deals to fly under the radar".
Khan noted further that less than two-thirds of the deals involved US-based firms. This means some of the acquisitions may have faced investigations in other countries, where different rules apply. The FTC chair said she was keen for the Commission to cooperate with and learn from international counterparts with broader expertise and tools in this area.
The other main finding highlighted by the FTC chair was the high number of do-not-compete clauses in the deals, used in 76 percent of the acquisitions. The Biden government has called for new limits on the use of such clauses across the wider economy, amid concerns they are being used excessively, to the point of holding back competition and employment.
