Private Equity News & Analysis

Judge dismisses Providence and Apollo from collusion case

With the removal of the two mega private equity firms, eight others remain accused of colluding to keep deal prices low during the credit bubble era.

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Providence Equity Partners and Apollo Global Management are free from a case that has shadowed them for six years.

A district court judge ruled Thursday that evidence was lacking that Providence and Apollo colluded with other private equity firms to rig bids and drive down competition for deals. “Apollo acted independently in ‘standing down,’” according to an opinion issued Thursday by Judge Edward Harrington.

“…the evidence of [Providence’s] involvement in other transactions is insufficient to connect it to the overarching conspiracy,” Harrington wrote in his opinion. 

Providence and Apollo declined to comment.
 
The suit was filed in December 2007 by individual shareholders in companies, like Freescale Semiconductor, that were acquired by the private equity firms. Detroit Police and Fire Retirement System and New Profit Sharing Trust joined the shareholders, Private Equity International wrote earlier.

Nearly a year later, Judge Harrington declined to dismiss the case that alleged the firms, including Kohlberg Kravis Roberts and The Blackstone Group, conspired to form “bidding clubs” to restrict the supply of private equity financing and to divide the market up in deals between 2002 and 2008, PEI previously disclosed.

One example was the $21.3 billion leveraged buyout of HCA. Bain Capital, KKR and others bought the hospital chain in 2006 and no competing offers were made, PEI wrote. The plaintiffs believe the defendants implicitly agreed not to compete with Bain and KKR.
 
Statements made during an intra-office email exchange between executives of The Carlyle Group suggest the firm and others including Goldman Sachs, TPG Capital and Blackstone refrained from bidding on the HCA buyout, according to Harrington’s opinion.
 
Another example listed in Harrington’s opinion involves the 2006 buyout of Freescale. Plaintiffs allege the supposed agreements violate federal law prohibiting contracts that restrict trade, according to the court documents.
 
KKR, Bain, Silver Lake Partners, Blackstone, Carlyle, TPG, Thomas H. Lee Partners and Goldman Sachs remained in the case as of Thursday.