DOJ Sues KKR for Serial Violations of Federal Premerger Review Law

The U.S. Department of Justice (DOJ) has filed a civil lawsuit against KKR & Co. Inc. and several of its affiliated investment advisors and funds for systematically violating the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), a crucial component of U.S. antitrust law. The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that KKR repeatedly circumvented the pre-merger review process by withholding and altering key documents and failing to file required pre-merger notifications for at least 16 transactions between 2021 and 2022.

The HSR Act mandates that companies involved in mergers, acquisitions, or similar transactions above a specified threshold must submit pre-merger filings to the DOJ's Antitrust Division and the Federal Trade Commission (FTC). This allows federal agencies to assess potential anticompetitive effects before transactions proceed. The DOJ’s complaint highlights that KKR, a prominent global investment firm with over $500 billion in assets under management, failed to meet these obligations on multiple occasions despite its extensive experience in the private equity sector.

Systemic Noncompliance

According to Acting Assistant Attorney General Doha Mekki of the DOJ’s Antitrust Division, KKR’s pattern of omissions and alterations undermined the integrity of the pre-merger review process. The lawsuit claims that KKR’s repeated disregard for legal requirements not only impeded proper antitrust scrutiny but also concealed the competitive risks posed by several of its deals.

Mekki stated, “KKR’s rinse-and-repeat failures to provide complete and accurate information about its mergers and acquisitions were systemic.”

The DOJ asserts that KKR altered documents in at least eight instances, including one case in which a senior partner instructed a team member to delete portions of a report ahead of an HSR filing. In another instance, KKR allegedly failed to submit any filing at all for transactions valued at $6.9 billion and between $376 million and $919 million.

Internal communications cited in the complaint suggest a pervasive culture of noncompliance at KKR. One employee, who admitted to omitting and altering documents, casually remarked, “I’ve always been told less is more 😊.” In response, a senior executive reportedly concurred, stating, “I believe in less is more too….”

The lawsuit further claims that this misconduct enabled KKR to close numerous transactions without proper federal review, in some cases obscuring the impact those deals could have had on market competition. These acquisitions, some involving critical industries, could have harmed consumers by reducing competition in important markets.

Penalties & Legal Remedies

The HSR Act allows for civil penalties exceeding $50,000 per day for each violation, with KKR’s total fines potentially exceeding $650 million. Beyond monetary penalties, the DOJ is seeking structural relief, including measures to ensure future compliance with the HSR Act.

As the case unfolds, the financial and reputational consequences for KKR could be significant, further highlighting the importance of adhering to antitrust regulations, especially for firms operating in high-stakes investment markets. The lawsuit serves as a stark reminder of the DOJ’s commitment to enforcing pre-merger review requirements and protecting competition in the U.S. economy.

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