KKR Faces $650M DOJ Lawsuit Over Alleged Improper Premerger Filings

The U.S. Department of Justice (DOJ) has filed a civil lawsuit against KKR & Co., alleging that the private equity giant repeatedly violated the Hart-Scott-Rodino (HSR) Act by failing to make complete and accurate premerger filings. The complaint, filed in the U.S. District Court for the Southern District of New York, seeks civil penalties and other relief, including compliance measures.

KKR, a global investment firm with over $500 billion in total assets under management, is accused of evading antitrust scrutiny for at least 16 separate transactions between 2021 and 2022. The DOJ alleges that KKR violated the HSR Act by altering documents in HSR filings, failing to make any HSR filing for two transactions, and systematically omitting required documents in HSR filings for at least 10 transactions.

The complaint cites internal documents that reveal a pervasive culture of noncompliance with the HSR Act at KKR. One employee described the approach to premerger filing obligations as "less is more," to which a more senior executive replied, "I believe in less is more too..." This culture contributed to KKR's repeated evasion of legally mandated scrutiny of its investment business.

The DOJ's complaint alleges that KKR's misconduct allowed it to reap millions of dollars in revenues from closing transactions without proper prior review by the federal antitrust agencies. In some cases, KKR's misconduct obscured the threat its deals posed to competition, including serial acquisitions affecting important markets. By preventing the federal antitrust agencies from effectively investigating the potential anticompetitive effects of KKR's transactions, KKR imperiled competition and potentially harmed consumers across the nation.

The HSR Act authorizes civil penalties for violations of the Act at more than $50,000 per day per violation. As a result, the maximum penalty for KKR's alleged violations exceeds $650 million. The complaint also seeks structural relief as well as other equitable relief, including compliance measures.

KKR has filed its own lawsuit against the DOJ, seeking an order finding that it did not violate the HSR Act. The company maintains that the alleged paperwork errors were inadvertent and not intentional attempts to circumvent antitrust review. KKR spokesperson Kristi Huller stated, "We are confident all our filings provided the government with the necessary information to fully assess each transaction."

The DOJ's lawsuit against KKR highlights the importance of compliance with premerger notification requirements and the potential consequences for companies that fail to do so. As a sophisticated private equity firm, KKR is familiar with the HSR Act and its requirements. The allegations against KKR serve as a reminder that even well-established firms can face significant penalties and reputational damage for noncompliance with antitrust laws.