Recently, a Federal judge refused to dismiss an antitrust
lawsuit against some of the major private equity firms. The
lawsuit alleged that these firms had collaborated to bring down
the prices of mega-takeovers during the buyout boom, thereby
duping shareholders of billions of dollars.
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At the same time, the judge also dismissed certain claims of the
lawsuit, providing some relief to the accused firms. Although the
judge mentioned that in some cases the buyers might have given
effort to lower prices, there was no evidence that could prove
that the transactions were actually rigged.
The plaintiffs had claimed that prices were reduced when the
private-equity firms formed groups to acquire companies. The
firms distributed the transactions among themselves and agreed
not to compete for the deals.
The lawsuit was filed in 2007 against 11 firms including private
equity giants, namely Bain Capital Partners LLC,
The Blackstone Group LP
The Carlyle Group LP
), GS Capital Partners - the private equity arm of
The Goldman Sachs Group, Inc.
Kohlberg Kravis Roberts & Co.
) and TPG Capital Management LP. The lawsuit alleged that these
firms had manipulated deals worth $250 billion over a period from
2003 to 2007.
The lawsuit encompasses 27 transactions including 2 deals, which
were never carried out, 19 leveraged buyouts, and 6 non-leveraged
JPMorgan Chase & Co.
), which acted as a financial adviser to many of the
above-mentioned deals, was a defendant but the charges against it
are now dropped.
For private equity firms, the continuation of this litigation
would result in millions of dollars in legal costs, adding to the
already-mounting expenses. However, with the removal of certain
of its claims, the lawsuit possibly opened doors for likely
settlement talks with the plaintiffs.