A US court is hearing a lawsuit alleging that private equity firms conspired not to outbid one another on companies they sought to purchase. One of the named defendants in the case, Thomas H. Lee Partners LP was recently released as the case against the firm was dismissed due to lack of merity by the court.
According to US District Judge Edward Harrington, he was in error in his July 18 ruling that email evidence presented showed ties of TH Lee to what is termed as an 'overarching' conspiracy between private equity firms to 'jump' each other. 'Jumping each other' was the term used to say that colluding private equity firms would not outbid each other after the transactions were announced.
After reviewing the evidence presented, Judge Harrington said a reasonable belief was formed that TH Lee had 'acted independently' during the takeover of casino operator Harrah's as well as Aramark, the food service company. It is this belief that moved him to dismiss the case against TH Lee Partners LP.
The case though still continues, as there were eight buyouts that totalled USD100 billion remain to be reviewed. Seven other defendants also remain tied to the case and these firms are Bain Capital Partners LLC, Blackstone Group LP, Goldman Sachs Group's private equity arm, the Carlyle Group, KKR & Co, TPG Capital Management LP and Silver Lake Partners.
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