The Anti-Competitive Nature of Private Equity Collaboration: Legal Risks and Mitigation
On June 11, 2014, Bain Capital Partners LLC and Goldman Sachs Group Inc. agreed to settle for $121 million a lawsuit which claimed that Bain and GS colluded to keep prices down in leveraged buyouts. The settlement and the pending trial involving the remaining defendants is a reminder to private equity groups that attempts at collaboration and involvement in club deals may be viewed through an anti-competitive lens, opening up private equity firms to potential liability. Overall, private equity firms need to be aware of the possibility of anti-competitive investigations and lawsuits occurring when firms collaborate. While the law is unclear as to how far private equity firms can collaborate, risks of anti-competitive action being taken against firms do exist and firms must be wary of these arrangements. The full alert is available here.