AIC Calls on FTC/DOJ to Prioritize Consumer Welfare & Small Businesses
New AIC public comment letters detail how private equity drives innovation and backs small businesses, American workers, pensioners, and economic growth
WASHINGTON, D.C. – The American Investment Council (AIC) recently submitted public comments on the Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division’s July 2023 draft merger guidelines and the FTC’s proposed amendments to the premerger notification rules under the Hart-Scott-Rodino (HSR) Act.
AIC urged the agencies to prioritize consumer welfare in the new merger guidelines and to withdraw the unwarranted “large-scale reorganization” and “comprehensive redesign” of the premerger notification form that would threaten the American economy, competition, and innovation. AIC notes, the FTC and DOJ’s proposals “tilt the balance too far towards the government managing the economy,” impacting American workers and small businesses and threatening to hinder innovation and economic growth.
- “Private equity helps fuel small businesses across America, supports millions of jobs, and strengthens retirements. FTC and DOJ’s proposed guidelines will stifle the flow of capital and make it harder for small businesses to get the funding they need to grow and succeed. American workers and small business owners deserve more economic opportunity, not excessive overreach from their government,” said AIC President & CEO Drew Maloney.
Across the United States, private equity brings essential capital and resources to American small businesses, workers, and communities. As the letters note:
- “By helping allocate capital and resources to the benefit of workers, communities, and the economy, the private equity industry benefits all Americans, including entrepreneurs who look to private equity to help bring their innovations to market, small businesses that depend on private equity for their financial health and long-term growth, and unions and pension funds that entrust their members’ savings to private equity investment.”
Specifically, the letters detail how private equity investment is:
- BUILDING SMALL BUSINESSES: Private equity has a demonstrated track record of facilitating growth and success for small businesses, “the backbone of the U.S. economy.” In 2022 alone, approximately 85% of private equity-backed businesses were small businesses with 500 employees or less. Studies also show that private ownership has become a “favored source of company financing,” helping small businesses “achieve efficient scale to generate efficiencies that help all Americans.”
- SUPPORTS INNOVATION: Private equity has a long history of “financing innovation,” whether it is providing capital and expertise to emerging technology companies, investing in life-saving medical innovations, or integrating new technology into mature businesses, private capital provides the tools needed for businesses to thrive in an ever-changing world.
- BACKING WORKERS: In 2022, U.S. private equity directly employed 12 million workers earning $1 trillion in wages and benefits. As the comment letter points out, workers at private equity-backed companies earn more than the average American – providing “crucial support” for families across the country, especially amidst “historic inflation.”
- SECURING RETIREMENTS: Private equity strengthens Americans’ retirement security, too – consistently delivering “the strongest returns of any asset class” for nearly 90% of U.S. public pensions that serve 34 million workers. From 2000 to 2022, state pension funds’ private equity allocations “produced an 11.4% net-of-fee annualized return,” compared to public stocks’ 5.8%.
Private equity’s invaluable contributions bolster the overall health of the American economy, directly generating 6.5% of U.S. gross domestic product (GDP), or $1.7 trillion, in 2022. Coupled with its induced economic impact (via suppliers and related consumer spending), private equity generated about 15% of U.S. GDP (over $4 trillion) and employed or supported over 31 million workers in 2022 – a reality that FTC and DOJ should seek to encourage, not endanger.
To read AIC’s full comment letters, click HERE and HERE.