The Justice Department is investigating whether some private equity firms may have intentionally withheld information in previous mergers, a senior official said Wednesday.
Richard Mosier, special counsel for private equity in the Justice Department’s antitrust division, said the agency has “renewed focus” on ensuring that private equity firms comply with federal law requiring companies to notify authorities antitrust their transactions, known as the Hart-Scott-Rodino Law or HSR.
Companies that “attempt to game the system run the risk of the HSR and perhaps its predecessors coming under scrutiny. The person who signs the form exposes themselves to liability,” Mosier said at a conference in Washington.
Mosier declined to name the companies involved in the investigation. KKR & Co. previously disclosed that the Justice Department was reviewing the accuracy of its merger notification documents for certain transactions in 2021 and 2022. In December, the company said it had received a grand jury subpoena on the accuracy of its records, an indication that the agency had opened a criminal investigation.
KKR declined to comment.
He cited February remarks from another senior Justice Department official who said private equity firms must fully comply with merger notification law and that failure to disclose information poses “an existential threat” to merger enforcement mergers.
The Justice Department is stepping up scrutiny of the private equity industry under President Joe Biden. Conducted an in-depth investigation into industry-focused board seat overlap. The enforcement push is based on a rarely invoked antitrust ban against so-called intertwined directors, where the same individuals or entities have seats on the boards of competing companies.
In considering merger applications, in addition to the notification form, the law requires a company to deliver documents including studies, analyses, and reports prepared for the company’s board of directors or executives regarding a transaction. Mosier said the concerns largely revolve around companies’ failure to turn over all requested documents, and that the agency doesn’t look into “accidental” situations in which a company forgets a thing or two.