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Serial Acquisitions and Industry Roll-ups – OECD – December 2023 OECD discussion

This presentation by the OECD Secretariat was made during the discussion “Serial Acquisitions and Industry Roll-ups” held at the 141st meeting of the OECD Competition Committee on 6 December 2023. More papers and presentations on the topic can be found out at oe.cd/sair. This presentation was uploaded with the author’s consent.

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Serial acquisitions and
industry roll-ups
Competition Committee – 6 December 2023
Carolina Abate and Zoe Lyon
OECD Competition Division
Serial acquisitions: pattern and/or strategy based
on sequential acquisitions of a series of small
companies by the same firm over time, in the
same or adjacent markets, then consolidated into
a larger, potentially dominant, company
• Growing trend
• Debate around consolidation risks
1
Background
• Financial vs strategic buyers
• Growth as main driver
– To achieve economies of scale and scope
– To increase shareholder value
– To strengthen market power and consolidate the
industry
• Digital markets
3
The strategy
• Industries’ characteristics:
– Strong need for economies of scale
– Highly fragmented
– Profitable
– Numerous small homogeneous businesses
Examples: veterinary clinics, grocery retail,
dental practices, pharmacies, waste management,
funeral homes
4
The sectors
• Competitive harm might emerge only over time
following several successive transactions
• Harm risks going unaddressed:
– Individual transactions below thresholds
– In isolation, no sufficient impact to meet substantive test
• No consensus on enforcement gap
• Need for more ex-post evidence from markets target
of serial acquirers
4
Competitive harm

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Serial Acquisitions and Industry Roll-ups – OECD – December 2023 OECD discussion

  • 1. Serial acquisitions and industry roll-ups Competition Committee – 6 December 2023 Carolina Abate and Zoe Lyon OECD Competition Division
  • 2. Serial acquisitions: pattern and/or strategy based on sequential acquisitions of a series of small companies by the same firm over time, in the same or adjacent markets, then consolidated into a larger, potentially dominant, company • Growing trend • Debate around consolidation risks 1 Background
  • 3. • Financial vs strategic buyers • Growth as main driver – To achieve economies of scale and scope – To increase shareholder value – To strengthen market power and consolidate the industry • Digital markets 3 The strategy
  • 4. • Industries’ characteristics: – Strong need for economies of scale – Highly fragmented – Profitable – Numerous small homogeneous businesses Examples: veterinary clinics, grocery retail, dental practices, pharmacies, waste management, funeral homes 4 The sectors
  • 5. • Competitive harm might emerge only over time following several successive transactions • Harm risks going unaddressed: – Individual transactions below thresholds – In isolation, no sufficient impact to meet substantive test • No consensus on enforcement gap • Need for more ex-post evidence from markets target of serial acquirers 4 Competitive harm