Federal Trade Commission (FTC) Chairwoman Lina Kahn, who took over the reins of the FTC in June, is making it clear that she is no fan of the direction some private equity-owned businesses have taken in recent years. She takes particular issue with, “extractive business models” that “centralize control and profits while outsourcing risk, liability, and costs.” She went on to say these business models, “warrant particular scrutiny, given that deeply asymmetric relationships between the controlling firm and dependent entities can be ripe for abuse.”
Kahn circulated a memo to commission staff and commissioners regarding the vision and priorities for the agency. In the memo, Kahn writes, “[t]he growing role of private equity and other investment vehicles invites us to examine how these business models may distort ordinary incentives in ways that strip productive capacity and may facilitate unfair methods of competition and consumer protection violations.”
By tying private investment to extractive business—and specifically to abuses that effect on marginalized communities—the chairwoman has put a target on these firms’ backs.