Private Equity Antitrust Litigation

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The case settled after two summary judgment rulings that significantly reduced the scope of the allegations.

Retained by Joint Defense Groups Representing Private Equity Firms

Cornerstone Research worked with Professor Paul Gompers of the Harvard Business School and Professor Kenneth Elzinga of the University of Virginia in Dahl et al. v. Bain Capital Partners LLC et al. A purported class of shareholders of firms that had been taken private alleged that the defendants, a number of leading private equity firms, had conspired not to compete against each other in order to depress prices paid in leveraged buyouts of the firms.

Professor Gompers showed the alleged conspiracy behaviors were consistent with the private equity firms acting in their own independent business interests, while Professor Elzinga responded to the plaintiffs’ claim of an alleged conspiracy not to compete in the leveraged buyout purchase of a major hospital chain.

Professor Gompers showed the alleged conspiracy behaviors were consistent with the private equity firms acting in their own independent business interests, while Professor Elzinga responded to the plaintiffs’ claim of an alleged conspiracy not to compete in the leveraged buyout purchase of a major hospital chain.

Professor Gompers evaluated the plaintiffs’ allegations and damages theory in light of standard practices in the private equity industry and in markets for corporate control, including consortium formation, investment criteria, limited partner-general partner (LP-GP) relationships, due diligence, and private equity firms’ role on portfolio companies’ boards. He submitted four expert reports in the summary judgment and class certification phases of the case.

Professor Gompers showed that competition for public targets is not limited to a small number of major private equity firms, and that the alleged conspiracy behaviors were consistent with the private equity firms acting in their own independent business interests. He also demonstrated that many factors specific to the firms and the targets were not considered in the plaintiffs’ formulaic damages approach. Therefore, the plaintiffs’ model could not determine whether the alleged conspiracy impacted each proposed class member or measure the extent of such impact.

Counsel for four defendants retained Professor Elzinga to respond to the plaintiffs’ claim of an alleged conspiracy not to compete in the leveraged buyout purchase of a major hospital chain, HCA Inc. He demonstrated that the firms’ decisions not to bid on HCA could not be explained by collusion because there could have been no expectation that the defendants would have benefited from such an agreement.

Professor Elzinga also explained the many reasons competing firms would decide unilaterally not to bid on a proprietary deal, including the disadvantages faced by specific potential bidders, the risks of overbidding, and the independent assessment of each of the defendants that HCA had been fairly priced by the initial consortium.

After two summary judgment rulings that significantly reduced the scope of the allegations, the case settled.


For more information on this case, contact Sasha Aganin.

Case Experts

Paul A. Gompers

Eugene Holman Professor of Business Administration,
Harvard Business School,
Harvard University;
Senior Advisor, Cornerstone Research

Kenneth G. Elzinga

Robert C. Taylor Professor of Economics,
University of Virginia;
Senior Advisor, Cornerstone Research