Plaintiffs Claim Managers of Targeted Companies Offered Incentives to Limit Number of Bids.

[ by Howard Haykin ]

Goldman Sachs Group and Bain Capital Partners, 2 of 7 big name firms fighting investor claims that buyout firms and their bankers colluded to rig bids on takeovers, are set to defend what they call legitimate private-equity practices. 

The defendants - the others being Blackstone Group; Carlyle Group;  KKR & Co;  Apollo Global Mgmt, JPMorgan Chase - are scheduled to argue today and tomorrow before U.S. District Judge Edward Harrington in Boston that a proposed antitrust lawsuit by shareholders in the acquired companies should be dismissed.

Individuals and pension funds that held shares in companies including Freescale Semiconductor Ltd. (FSL), Neiman Marcus Group Inc., and HCA Holdings Inc. (HCA) sued in 2007 and 2008, claiming “a conspiracy among private equity firms to rig bids, restrict the supply of private-equity financing, fix transaction prices and divide up the market for private-equity services for leveraged buyouts.” They are seeking a jury trial and money damages.

“If true, we have some pretty serious violations of the antitrust laws,” Darren Bush, a professor of antitrust law at the University of Houston Law Center, said in an interview. “If this conduct is really going on and it’s really problematic, it ought to have a trial.”

The defendants said in court papers that the plaintiffs don’t have the right to sue for antitrust violations that would be subject to SEC regulations. They also said the transactions represented legitimate business practices.

For further details, go to:   [Bloomberg, 12/18/12].