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The author is Chairman and CEO of the American Investment Council
The United States is a beacon of global investment and innovation. Private equity plays a critical role in building better businesses, employing millions of people and delivering strong returns to support the retirements of millions of working-class Americans. About 85% of private equity investments back small businesses with fewer than 500 employees.
Unfortunately, the Biden administration’s regulatory agenda is now threatening the system that supports workers and small businesses across America. Federal Trade Commission Chairwoman Lina Khan used recently filed health care cases as an opportunity to lash out at the agency — all in pursuit of a radical new antitrust theory.
the fact is”buy and buildSome private equity firms use models that help highly fragmented and cost-intensive industries like health care become more competitive and expand access to care. Studies show that private equity-backed hospitals score better on quality, which means better care for patients. Meanwhile, for decades, private equity has filled critical gaps in the U.S. health care system, providing doctors, nurses and hospitals with the resources they need to treat patients and provide high-quality care.
Recently, I’ve heard from small business owners and healthcare industry professionals how the support of private investment is leading to better outcomes for their businesses, workers and communities.
For example: Recently, Otter Learning founder and CEO Chase Begor tell me Private investment allows the early childhood education company to provide better health insurance, retirement security and other benefits for its employees. In turn, Otter Learning teachers are able to “really focus on…” . . To provide (their) students with a higher quality educational experience,” he said.
Unfortunately, government officials like Khan do not see this reality. Her efforts to reimagine federal antitrust law by breaking down the “consumer welfare” standard, which has long measured actions and investments based on whether they benefit American consumers, will only slow the economic engine.
The FTC has lost a series of high-profile court cases in recent months. “She’s trying to change a century of antitrust law overnight, and that’s not necessarily smart,” said Anthony Sabino, a business and law professor at St. John’s University.
The Federal Trade Commission recently announced widely criticized proposals for merger guidance and premerger notification filing requirements. These measures seek to restrict the flow of commercial capital to the United States, harm the economy, and have no clear objectives. Experts such as Lawrence Summers, former U.S. Treasury Secretary and director of the National Economic Council during the Obama administration, pointed out that the proposed approach “almost looks like a business war.” It poses “significant risks” to consumers and health markets.
Other economists agree that the proposed merger guidelines rely on outdated case law and abandon established economic principles. A former economic adviser to Barack Obama and a former antitrust official at the Justice Department said: “The new draft guidance is radically different from previous versions, with regulators interpreting case law above what is widely accepted. Economic principles. Guidelines . . . should not become contentious legal briefs or, worse, political footballs.”
Private equity directly supports the employment of 12 million workers and has invested in more than 44,000 U.S. businesses since 2017.More than 34 million public servants rely on private equity to support their retirement, and as part of a diversified portfolio, private equity remains consistently deliver Public pensions have the highest returns of any asset class.
Our fragile economy cannot afford a government seizure of power that blocks access to critical capital. What critics of private equity don’t understand is that making it harder to invest in industry will only make it harder for America’s small businesses, the lifeblood of the economy, to grow, scale, innovate and hire new workers.
Existing rules, laws and regulations have provided important guarantees for the private equity industry. Imposing baseless antitrust theories will only harm businesses, workers, and retirees across the country. Rather than threatening investments that help competitive markets thrive, we should encourage more partnerships that benefit consumers, workers, entrepreneurs, retirees, doctors and nurses.
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