August 10, 2022

Antitrust: PE Firm & Subsidiary Must Face Sherman Act Claims

I recently blogged about an 11th Circuit decision holding that a private equity firm can’t conspire with its portfolio company under the Sherman Act.  It turns out that’s not exactly a get out of jail free card from Sherman Act liability.  This Mintz memo reviews a recent decision in which a federal court refused to dismiss claims against PE firms under Section 1 & Section 2 of the Sherman Act that arose out of the conduct of their portfolio company.

As this excerpt explains, while the entities weren’t regarded as co-conspirators, they could face liability under the statute based on their status as a single enterprise:

The district court agreed with PE defendants that Charlesbank and Bain are not separate actors from Varsity capable of conspiring under the Sherman Act. However, the district court found that plaintiffs could still pursue their claim based on their allegations that Varsity (considered as one enterprise with the PE defendants) and USASF engage in an unreasonable restraint of trade and conspired together. Hence, the court kept the PE defendants in the Section 1 claim.

On the Section 2 monopolization claim, the district court held that plaintiffs need only allege anticompetitive conduct by a single actor. Thus, by alleging Varsity’s exclusionary scheme, plaintiffs sufficiently alleged a claim in which PE defendants could be viewed as a shared enterprise with Varsity.

John Jenkins