The has signaled it will take action to close loopholes that allow to avoid reporting of smaller companies.

On Wednesday, the agency's Office of Policy Planning from a study which focused on over 600 unreported acquisitions by Alphabet, Amazon, Apple, Facebook, and Microsoft between Jan. 1, 2010 and Dec. 31, 2019.  

Ticker Security Last Change Change %
ALPHABET, INC. 2,816.00 -56.20 -1.96%
AMAZON.COM, INC. 3,462.52 -25.72 -0.74%
APPLE, INC. 146.06 -2.73 -1.83%
FACEBOOK, INC. 364.72 -8.34 -2.24%
MICROSOFT CORP. 299.87 -5.35 -1.75%

The found that, out of 616 acquisitions valued at or above $1 million, 94 transactions had exceeded the Hart-Scott-Rodino (HSR) Act's . Under the law, companies are required to report transactions exceeding $92 million in value. Approximately 65% of the 616 transactions were between $1 million and $25 million.

"While the Commission’s enforcement actions have already focused on how digital platforms can buy their way out of competing, this study highlights the systemic nature of their acquisition strategies," FTC chair Lina Khan said in a . "It captures the extent to which these firms have devoted tremendous resources to acquiring start-ups, patent portfolios, and entire teams of technologists—and how they were able to do so largely outside of our purview."

Approximately 36% of the transactions involved the acquirer assuming some amount of debt or liabilities, while more than 79% involved "deferred or contingent compensation to founders and key employees" and more than 75% included noncompete clauses for founders and key employees of the acquired entities.

In addition to the 94 transactions that were found to exceed the HSR size of transaction threshold, FTC staff noted an additional three transactions would have exceeded the threshold when adding debts and liabilities to the overall purchase price and an additional nine transactions would have exceeded the threshold when adding the deferred or contingent compensation to their purchase price.

Asset and control transactions, including voting security control and non-corporate interest control transactions, were the most common unreported acquisitions found by the FTC. At least 39% of transactions where the target company's age was available showed the acquired firm was less than five years old at the time of consummation. 

FTC commissioner Rebecca Kelly Slaughter said the release of the study will allow officials to "understand the bigger picture patterns among the largest tech platforms" and will help the agency better target its enforcement efforts.

"I think of serial acquisitions as a ‘Pac-Man’ strategy," Slaughter said. "Each individual merger, viewed independently, may not seem to have a significant impact, but the collective impact of hundreds of smaller acquisitions can lead to a monopolistic behemoth."

According to Khan, the findings underscore the need for the FTC to closely examine HSR Act reporting requirements and to identify areas where the agency "may have created loopholes that are unjustifiably enabling deals to fly under the radar."

She also stressed the importance of working closely with international counterparts, citing the reports finding that less than two-thirds of the non-reported acquisitions involved the acquisition of domestic assets or firms. In addition, Khan called for further scrutiny of noncompete clauses in merger transactions. 

"While the Commission should ensure that we use these findings to plug gaps in our existing work, I hope this study also proves useful to lawmakers as they consider reforms to the antitrust statutes," Khan added.