Compliance with antitrust laws was never a pressing issue for private equity firms. Antitrust compliance briefly came to the forefront of the industry in 2007, when the U.S. Department of Justice briefly investigated the industry and a series of private lawsuits were filed against private equity firms. However, the DOJ’s investigations stalled, the private lawsuits languished for the most part, and the private equity industry was able to turn its head away from the antitrust laws once again. Today, with the issuance of a recent court decision and increased government activity, it would be wise for private equity firms to once again educate themselves on the antitrust laws.
Recently, private equity firms were able to achieve a partial dismissal in a “buying club” lawsuit alleging violations of the Sherman Act. In March, the U.S. District Court for the District of Massachusetts issued a decision on summary judgment partially dismissing a lawsuit brought against private equity firms alleging, in part, that the formation of buying clubs by the private equity firms violated the antitrust laws. In Dahl v. Bain Capital Partners LLC, No. 07-12388-EFH (D. Mass. Mar. 13, 2013), shareholders of companies acquired by private equity “clubs” from 2003 to 2007 filed a lawsuit against 10 prominent private equity firms alleging violations of the antitrust laws. The plaintiffs alleged that the firms conspired to suppress competition and hold down the prices in bidding for 28 target companies. While the plaintiffs offered no direct evidence of any such agreement, they argued that an agreement not to compete could be inferred from the various collaborative practices employed by the clubs. The district court found that the majority of the collaborative practices in question employed by the clubs did not support an inference of a conspiracy to suppress competition, but the court nevertheless allowed a portion of the claims to proceed.
