Antitrust and Private Equity – Parental Liability Rules Can Allow Authorities to Claw Back Profits In UK and Europe

By: David Gallagher (The Thicket)

Private equity (PE) is in focus for antitrust authorities. In a merger control context, concerns around roll-up and keeping the bigger picture in mind occupy both Jonathan Kanter at the DOJ and Lina Khan at the FTC. My colleague Stijn Huijts covered this in his 13 June 2022 blog.

Consideration of the PE angle is not limited to the US. Nor is it limited to mergers. It is also something that the UK Competition and Markets Authority (CMA) has been grappling with in its recent Liothyronine and Hydrocortisone abuse of dominance decisions.

CMA Liothyronine and Hydrocortisone decisions include hefty fines for former PE owners

The CMA’s Liothyronine excessive pricing decision sets out how HgCapital and Cinven were party to the underlying antitrust breach under the laws on parental liability. HgCapital was fined £8.6m and Cinven was fined £51.9m. This is despite their involvement with the pharma company selling Liothyronine having ended in 2015 and 2018 respectively. The PE firms’ appeals to the Competition Appeal Tribunal (CAT) will be heard in September 2022.

In the CMA’s Hydrocortisone decision, the CMA fined Cinven £35.1m in total. Again, Cinven’s relationship with the underlying pharma business ended in 2018. Cinven will be at the CAT appealing this decision in November 2022…

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