By Chris Cumming

Welsh, Carson, Anderson & Stowe has agreed to settle Federal Trade Commission charges that it tried to consolidate the Texas anesthesia market to drive up prices, eight months after a federal judge dismissed similar charges against the private-equity firm.

Under the settlement, announced Friday, Welsh Carson agreed to limit its involvement with Texas anesthesia-services company U.S. Anesthesia Partners, to obtain the regulator's advance approval for any future acquisitions of anesthesia businesses and to provide advance notice of future deals for hospital-based physician practices.

A spokesman for the New York-based firm called the terms of the settlement "benign" and said the agreement "will not affect our business in any respect and involves no admissions of wrongdoing or monetary penalties."

The FTC brought this case against Welsh Carson via its in-house administrative courts. The regulator, which is tasked with enforcing fair business competition, also brought federal monopolization charges against Welsh Carson and U.S. Anesthesia Partners in 2023, but a judge dismissed the claims against the private-equity firm last May. The case against U.S. Anesthesia Partners is ongoing.

The FTC said that bringing a second monopolization case against Welsh Carson through its administrative courts demonstrated its resolve to prevent anticompetitive behavior. In a statement, FTC Chair Lina Khan said Friday it also showed a "novel" approach to private equity that it can apply to other firms in the future.

The settlement "establishes a valuable blueprint for future Commission orders involving financially sophisticated actors," Khan said.

Welsh Carson said the FTC pressured it to agree to the settlement for political reasons, and that the firm is proud of its reputation and integrity.

"In a last-minute effort to claim a political victory, the outgoing FTC leadership threatened to re-litigate in its captive administrative court the exact same overreaching claims that were dismissed last year by an independent Federal judge unless we agreed to a settlement by Inauguration Day," the spokesman said.

FTC commissioners voted five to zero in favor of the settlement, including Andrew Ferguson, Donald Trump's pick to lead the agency. In a statement Friday, Ferguson called the settlement an "ordinary application of the most elementary antitrust principles," and said the fact that Welsh Carson is a private-equity firm is irrelevant to the case.

Under Biden-appointed Khan, the FTC has sharpened its focus on private-equity firms due to concerns that their acquisitions can constrict competition. The agency has shown particular concern about private-equity roll-ups, or deals in which a firm buys many small firms and combines them into a larger company, which agency leadership said can be used to drive out competitors and raise prices.

The 2023 suit against Welsh Carson was the first test of the FTC's aggressive approach to private equity. The agency alleged U.S. Anesthesia Partners typically raised prices after acquiring businesses, and tried to keep potential competitors out of its market.

Welsh Carson created U.S. Anesthesia Partners in 2012, and the company has since acquired 15 more anesthesia groups to become Texas' largest anesthesia provider and one of the largest in the country. Welsh Carson currently owns a minority stake in the company, through a fund.

Last May, U.S. District Judge Kenneth Hoyt in Houston dismissed the charges against Welsh Carson, which he said were an overreach by the regulator, but allowed the FTC's claims against U.S. Anesthesia Partners to proceed.

Many in private equity are hopeful that as Biden-appointed antitrust regulators depart and are replaced by Trump appointees, the scrutiny on their industry will diminish and it will become easier to get regulatory approval to buy companies.

Under current FTC leadership, the agency released new merger guidelines that make it easier to challenge private-equity roll-ups, and launched a multiagency investigation of private equity profiteering in healthcare.

Earlier this week, the Justice Department sued private-equity giant KKR, alleging a "culture of noncompliance" with antitrust law, which the firm denies.

Write to Chris Cumming at chris.cumming@wsj.com

(END) Dow Jones Newswires

January 17, 2025 16:11 ET (21:11 GMT)

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