Private equity 'club deal' lawsuit withdrawn

By Michael Flaherty

NEW YORK, Aug 23 (Reuters) - Investors in companies acquired by Kohlberg Kravis Roberts & Co, Blackstone Group LP and 11 other private equity firms have withdrawn a lawsuit accusing the buyers of collusion, a lawyer for the plaintiffs said on Thursday.

The federal lawsuit, filed in November, said the shareholders' investments suffered because the 13 private equity firms violated antitrust laws by conspiring to fix deal prices.

The complaint, filed in U.S. District Court in Manhattan, said the private equity firms had formed "clubs" among themselves to bid collectively in buyouts, a move that could drive down the price of deals.

For example, the auction of Spanish language broadcaster Univision Communications in the spring of 2006 at one point involved two teams, each consisting of four buyout firms. Eventually the company sold for $12.3 billion.

The suit also said the firms exchanged information and submitted bids at agreed-upon prices.

The case followed reports in October that the U.S. Department of Justice was investigating private equity firms for anti-competitive tactics and collusion.

But a Supreme Court ruling in a separate case in May led the "club deal" plaintiffs to drop their complaint.

"Our complaint was based on statistical analysis of conduct," said Fred Isquith of Wolf Haldenstein Adler Freeman & Herz, the law firm representing the plaintiffs. "And we concluded that given the Supreme Court's new philosophy, it signaled that proceeding with the complaint would not be fruitful."