Private Equity Firms Accused of Agreeing Not to Compete

Lawsuit claims firms rigged bids in leveraged buyouts and other transactions.

Top executives at buyout firms including Blackstone Group LP, KKR & Co., Bain Capital Partners LLC and Carlyle Group LP assured each other in e-mails that they wouldn’t compete on deals to avoid driving up prices and angering competitors, according to a now public court complaint.

The correspondence was cited as evidence that the firms rigged bids in 19 leveraged buyouts and eight other transactions, including the biggest deals of the leveraged buyout boom, according to the amended complaint unsealed yesterday by a federal judge in Boston.

Bidding Clubs

“They neither identify any direct evidence of an actual agreement among these 17 defendants to fix the market for large LBOs nor allege circumstantial facts that support the plausibility of such a conspiracy,” the defendants said in court filings. “These transactions simply represent the normal workings of the mergers and acquisition business.”

HCA Bid

According to the investors’ complaint, KKR “asked the industry to step down on HCA.” The investors attributed the comment to an e-mail from Dan Akerson, then the co-head of Carlyle Group’s U.S. buyout group.

Market Freeze

Clear Channel Communications was acquired by Bain and Thomas H. Lee Partners LP in July 2008 for $17.9 billion, before credit markets froze and the recession caused a drop in advertising demand. Clear Channel owns the largest U.S. radio broadcaster.

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