Private-Equity Firm Welsh Carson Settles FTC Monopolization Case

Private-equity firm Welsh, Carson, Anderson & Stowe (WCAS) has reached a settlement with the Federal Trade Commission (FTC) over allegations of monopolization in the Texas anesthesia services market. The settlement, announced on January 17, 2025, resolves a potential second administrative antitrust case against WCAS and its portfolio company, U.S. Anesthesia Partners (USAP).

The FTC's complaint, filed in federal district court in September 2023, alleged that WCAS and USAP engaged in a roll-up scheme by systematically buying up nearly every large anesthesia practice in Texas, creating a single dominant provider with the power to demand higher prices. The complaint also accused USAP of entering into price-setting arrangements with remaining independent practices and forming a market allocation arrangement with another large anesthesia services provider.

In May 2024, the district court dismissed WCAS from the FTC's federal challenge on procedural grounds, finding that the FTC lacked authority to bring the case against WCAS in federal court because the complaint did not allege that WCAS was currently violating the law, as required under Section 13(b) of the FTC Act. The FTC's antitrust case against USAP continues to proceed in federal court.

The settlement with WCAS requires the private equity firm to limit its ongoing ownership rights and entanglements with USAP by freezing its investment in USAP at current levels and reducing its board representation to a single, non-chair seat. This will prevent WCAS and its affiliates from retaking control over USAP and reduce their ability to benefit from USAP's monopoly position in Texas. Additionally, WCAS must obtain prior approval from the FTC for any future investments in anesthesia nationwide, as well as prior approval for certain acquisitions by any majority-owned WCAS anesthesia group nationwide. The firm is also required to provide 30-days advance notice for certain transactions involving other hospital-based physician practices nationwide.

The FTC's proposed consent order, which was unanimously approved by the commissioners, aims to protect the public from WCAS's potential future anticompetitive conduct and deter others from engaging in similar conduct. The settlement follows an initial federal court complaint against USAP and WCAS, which alleged that the two entities engaged in a multi-year anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of anesthesia services, and boost their own profits.



The settlement with WCAS highlights the FTC's commitment to challenging anticompetitive conduct in the healthcare industry, particularly in the context of private equity involvement. The FTC's action sends a clear message to other private equity firms and healthcare providers that serial acquisitions and roll-ups may be scrutinized and challenged if they harm competition and consumers.

In conclusion, the settlement between the FTC and Welsh Carson underscores the agency's determination to protect consumers from anticompetitive conduct in the healthcare industry. By limiting WCAS's involvement with USAP and requiring prior approval for future investments and acquisitions, the FTC aims to promote competition and prevent future harm to consumers. The settlement serves as a reminder to private equity firms and healthcare providers that anticompetitive practices will not be tolerated and may result in regulatory action.