DOJ Sues Private Equity Firm for Purported HSR Reporting Violations

On January 14, 2025, the U.S. Department of Justice, Antitrust Division (DOJ) filed a civil complaint in the U.S. District Court for the Southern District of New York against KKR & Co. Inc. and its co-defendant investment advisors and funds (collectively, KKR), alleging violations of federal law governing certain mergers and acquisitions for at least 16 transactions from 2021 to 2022. 

DOJ alleges that KKR skirted the mandates of the Hart-Scott-Rodino (HSR) Act, which requires parties to transactions exceeding a certain threshold size to submit premerger filings for review and to observe a statutory waiting period prior to completing the deals. According to DOJ, KKR’s alleged violations represent a broader trend by the firm of “repeatedly” and “systematically flout[ing]” the requirements of the premerger antitrust review process under the HSR Act. This lawsuit comes at a time when antitrust enforcers have increased scrutiny of private equity firms more generally. 

In its 43-page complaint, DOJ asserts that KKR and its executives — despite KKR’s status as one of the “oldest, largest, and most-sophisticated private equity firms in the United States” — failed to make complete and accurate premerger filings for at least 16 transactions of the more than 100 filings the private equity firm was required to make since 2021. DOJ asserts 16 counts of HSR Act violations (one count for each of the transactions at issue) and predicts that “[t]he actual number of HSR Act violations to be uncovered during discovery is likely higher.”

KKR faces a maximum statutory penalty currently anticipated to exceed $650 million. DOJ seeks structural relief, as well as other equitable relief, including compliance measures. 

Violations Reflecting a Wider Culture of Non-Compliance

According to DOJ, KKR’s systematic violations of the HSR Act stem from a failure by its executives and outside counsel to take the necessary steps to ensure that KKR and its affiliates complied with the law. And, “[i]f anything,” the 16 violations identified so far — echoing the words of KKR’s own employees — “suggest a culture of noncompliance with the Act that pervades its investment businesses.” 

Specifically, DOJ claims that KKR failed to file required business documents such as those that “assessed competition in markets impacted by the deal,” including “documents that had already been circulated to its partners and investment committees, despite certifying that it had done so.” DOJ also alleges that “KKR failed to correct a deficient filing to include documents that its outside counsel had in their possession, even after its outside counsel relayed the Antitrust Division’s inquiries about potentially omitted documents.” Perhaps most striking, DOJ claims that KKR executives and employees knowingly altered or omitted documents to evade merger scrutiny, citing to internal communications between KKR employees. Some of these alterations, according to DOJ, occurred “even after [KKR] became aware of the Antitrust Division’s investigation into its HSR Act compliance.” 

Types of HSR Act Violations Alleged 

DOJ’s complaint implicates a total of 16 presently identified transactions that span a wide range of industries, including labor analytics, fixed-based operation services, consulting, media, investments, software, job corps services, rubber, and marketing. The complaint alleges three types of violations: 

• Filings in which KKR allegedly certified that it had complied with the HSR Act and Rules but failed to submit required HSR Item 4 documents, as relating to 10 transactions
• Filings in which KKR allegedly altered language in HSR Item 4 documents, as relating to eight transactions
• Transactions for which KKR allegedly failed to properly notify a merger or acquisition at all, as relating to two transactions

KKR Countersues DOJ 

On January 14, 2025, KKR responded to the DOJ action, filing a lawsuit against DOJ, Acting AAG Doha Mekki (in her capacity as Acting AAG), and the Federal Trade Commission (FTC) in the U.S. District Court for the District of Columbia. The aim of the lawsuit is to prevent the imposition of “draconian” penalties sought to be levied against the firm. KKR seeks declaratory judgment that the agencies’ interpretations of the HSR Act are unconstitutionally vague, and that the fines sought are excessive in violation of the Fifth and Eighth Amendments to the U.S. Constitution.

KKR claims that the penalties derive from — as the complaint alleges the agencies have previously acknowledged — “confusing” guidance on regulations relating to pre-merger notification filings that are “subject to a range of interpretations.”¹

KKR also claims that the agencies have “made no secret of their hostility towards mergers and acquisitions involving the private equity industry,” and are rushing to “start enforcement actions in the final days of the current administration.” KKR further defends its actions by claiming that the firm fully cooperated with DOJ’s investigation for nearly three years, that any alleged filing errors identified by the agency are “trivial,” and that any alleged pre-merger paperwork errors were immaterial to antitrust clearance. 

Enforcement Landscape 

The DOJ action is in line with broader federal antitrust enforcement trends and efforts in recent years to crack down on acquisitions by private equity firms.² As relayed by outgoing FTC Chair Lina Khan, the agencies have been “committed to using the full scope of their statutory authorities to protect free and fair competition and prevent undue consolidation.”³ Accordingly, in December 2024, DOJ also initiated a criminal probe into the accuracy of KKR’s filings.⁴ DOJ’s criminal inquiry coupled with the new civil suit, as well as the revised HSR rules, are emblematic of the agencies’ commitment to ensuring they have all the information they need to investigate and take action against potentially anticompetitive transactions. 

Takeaways

• DOJ is engaging both criminal and civil enforcement strategies to ensure HSR compliance. Parties to a transaction large enough to trigger HSR premerger filing obligations should err on the side of over-inclusiveness with respect to document production to outside counsel, maintain and update internal document preservation policies, and have a plan for engagement should the agencies launch an inquiry.
• With the new HSR rules anticipated to go into effect, companies are well-advised to determine, at the outset of a transaction, one individual who will serve as the supervisory deal lead to identify and collect that individual’s documents when the time comes; and understand in advance the universe of relationships between the merging parties to quickly gather any identification of agreements and description of any overlaps.⁵
• Notwithstanding the upcoming change in administration and leadership shakeups at both DOJ and FTC, antitrust enforcement in mergers and acquisitions is likely to remain robust. Companies that engage in frequent transactions should be mindful of the potential for continued and increased scrutiny, and monitor new or abandoned priorities with the administration change and transition.
• Ongoing enforcement attention on investors (including private equity and venture capital firms), particularly with respect to Section 8 of the Clayton Act, is a timely reminder for companies and counsel to do their due diligence regarding interlocking directorates and monitor any board rights or appointments for compliance with antitrust laws. 

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.