Australia regulator eyeing private equity Coles bid

MELBOURNE, March 29 (Reuters) - Australia's competition regulator said on Thursday it is watching the behaviour of private equity firms expected to bid for retailer Coles Group Ltd. CGJ.AX to ensure there is no collusion between the firms. "The concern is private equity firms have the potential to lock up all the potential investors, and particularly lock up the banks," Australian Competition and Consumer Commission Chairman Graeme Samuel told reporters after a business lunch. "We are watching that to see there is no undue competitive collusion taking place in private equity bidding," he said.

A group of six private equity firms led by Kohlberg Kravis Roberts [KKR.UL] is interested in the potential break-up or sale of Australia's second-largest retailer, which set the rules for its auction earlier this week.

Coles has set a limit of six members on any consortium, softening its initial stance of a limit of four.

Coles has also set a limit of three exclusive banks to prevent one syndicate from tying up resources. That sets it against KKR which has lined up a group of 11 banks on the deal, according to press reports.

Samuel said that while the regulator would not try to set limits on the number of firms in a deal, it would consider whether there is "a potential deliberate lockout" of other firms or resources occurring.

He said the ACCC has been in touch with the U.S. Department of Justice over the behaviour of private equity firms in general. U.S. federal authorities are investigating whether teams of private equity bidders have colluded to drive down the prices of auctions.

((Reporting by Victoria Thieberger, editing by James Thornhill; victoria.thieberger@reuters.com; Reuters Messaging: victoria.thieberger.reuters.com@reuters.net; +61 3 9286 1421)) Keywords: AUSTRALIA REGULATOR/PRIVATE EQUITY

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