January 16, 2025
Antitrust: DOJ Sues KKR for Alleged “Serial Violations” of HSR Act & KKR Fires Back
On Monday, the DOJ announced that it had filed a civil action against KKR, alleging that the firm “evaded antitrust scrutiny for at least 16 separate transactions by failing to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976.” Here’s a copy of the DOJ’s 43-page complaint. This excerpt from the DOJ’s press release summarizes its allegations:
The department’s complaint alleges that over the course of two years — 2021 and 2022 — KKR failed to make complete and accurate premerger filings for at least 16 transactions. Specifically, KKR violated the HSR Act by:
– Altering documents in HSR filings for at least eight transactions. For example, in April 2021, a KKR partner instructed a deal team member to edit a portion of an Investment Committee report in advance of the HSR review process by circling the “Competitive Behavior” section of a diligence chart and writing “[need to revise for HSR purposes]” in the document. The KKR deal team member did not merely revise the language but deleted it entirely before submitting the altered document to the Antitrust Division.
– Failing to make any HSR filing for at least two transactions. KKR did not submit an HSR filing prior to consummating an acquisition valued at $6.9 billion. It also did not submit a filing prior to consummating an acquisition worth between $376 million and $919 million.
– Systematically omitting required documents in HSR filings for at least 10 transactions. KKR repeatedly certified that it had complied with the HSR Act but did not include required documents in those filings. In many cases, KKR only identified such documents in response to an Antitrust Division investigation.
KKR isn’t taking the DOJ’s actions lying down. It filed its own lawsuit seeking, among other things, a declaratory judgment that it did not violate the HSR Act. Here’s a statement from KKR that the company included in its 8-K filing disclosing the DOJ’s action and its countersuit:
Earlier today, we filed a complaint challenging the abuse of power and unconstitutional application of the HSR Act by the Antitrust Division of the Department of Justice.
As background, we have been cooperating in good faith with the Antitrust Division for nearly three years regarding certain HSR filings made in 2021 and 2022. We are confident all our filings provided the government with the necessary information to fully assess each transaction. We reached an impasse due to our strong disagreement that some inadvertent, alleged paperwork errors were in any way an intentional attempt to circumvent antitrust review.
Over the course of our discussions, it became clear that the outgoing political leadership of the Antitrust Division was mischaracterizing our actions and overstepping its statutory authority. This is a classic case study of government agency overreach.
We took this action reluctantly. We and our founders have managed our firm for 50 years by choosing to do what is right over what is easy. It is our hope that an independent arbiter might facilitate a more fact-based—and less political—approach.
Between this action by the DOJ’s Antitrust Division and the SEC’s filing of a new lawsuit against Elon Musk, it’s pretty clear that the Biden administration’s regulators have resolved not to “go gentle into that good night.” Stay tuned to see how the gang from Trump 2.0 takes things from here.
– John Jenkins