KKR agrees to pay record $250 million penalty for federal pre-merger violations

The Justice Department filed a proposed settlement Wednesday requiring KKR & Co. GP LLC to pay a $250,000,000 civil penalty to resolve allegations that KKR repeatedly flouted the pre-merger antitrust review process.
The United States’ Complaint alleged KKR evaded antitrust scrutiny for at least 16 separate transactions by failing to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).
“This historic $250 million civil penalty—more than 20 times any prior HSR penalty obtained by the DOJ – sends a powerful message: the Department is committed to vigorous enforcement of the Act,” said associate attorney general Stanley Woodward Jr in a statement on Wednesday. “The Act’s requirements protect competition by giving the Justice Department an opportunity to investigate potentially unlawful transactions. Companies that disregard their legal obligations will face serious consequences.”
The HSR Act requires parties to a merger, acquisition, or other transaction above a certain size to submit a premerger filing to the Department of Justice’s Antitrust Division and the Federal Trade Commission to facilitate the agencies’ enforcement of Section 7 of the Clayton Act, which prohibits mergers and acquisitions that threaten to harm competition.
As a sophisticated private equity firm that buys and sells companies, KKR is familiar with the HSR Act and its requirements. Since 2021, KKR has been required to make more than 100 premerger filings under the HSR Act.
The division’s complaint alleged that in 2021-2022, KKR failed to make complete and accurate premerger filings for at least 16 transactions.
Specifically, KKR violated the HSR Act by altering documents in HSR filings for at least eight of those transactions, failing to make any HSR filing for at least two of those transactions, and systematically omitting required documents in HSR filings for at least 10 of those transactions.
The HSR Act authorises civil penalties of more than $50,000 per day per violation. The proposed $250 million penalty is the largest civil penalty ever assessed for violating the HSR Act.
KKR is a global investment firm headquartered in New York, New York. It is one of the world’s largest investment firms with over $744 billion in total assets under management.
KRR, however, disagreed with the characterisation of the matter.
“We have agreed to a civil settlement that fully resolves the litigation and all open investigations by the Antitrust Division of the U.S. Department of Justice regarding certain of our HSR filings from 2021 and 2022. The civil penalty will have no financial impact on the firm, our funds, or any of our investors and will be fully reimbursed by outside law firms.
“We strongly disagree with the Antitrust Division’s characterisation of this matter. We believe that our firm acted in good faith at all times under our prior filing process, and it was consistent with industry practice. However, we determined that ongoing litigation would be a significant distraction for our organisation, and we are pleased to put this behind us.
“We will continue to conduct our business with integrity and in compliance with applicable laws, and we remain focused on generating positive outcomes for all our stakeholders in the years ahead,” a KKR spokesperson stated.
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