Goldman and Bain Settle Suit on Collusion

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Goldman Sachs, which did buyout deals through its private equity arm, agreed to pay $67 million to settle the claims.Credit Shannon Stapleton/Reuters

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Goldman Sachs and Bain Capital have agreed to pay a combined $121 million to settle a lawsuit that accused them and other firms of colluding to drive down the prices of takeovers before the financial crisis, according to a court filing on Wednesday.

The deal, if approved by the court, would bring closure for Goldman and Bain of a seven-year-old lawsuit filed by former shareholders of the acquired companies, who claimed that private equity firms teaming up to do deals were partners in an illegal conspiracy to reduce competition.

But the settlement deal also raises the stakes for the remaining defendants, which include some of private equity’s biggest firms. The Blackstone Group, Kohlberg Kravis Roberts, TPG Capital, Silver Lake and the Carlyle Group are scheduled to head to trial in November. Lawyers for the firms have said the case is without merit.

Goldman, which did buyout deals through its private equity arm, agreed to pay $67 million to settle the claims, while Bain Capital agreed to pay $54 million, according to the filing in Federal District Court in Massachusetts. The firms denied wrongdoing as part of the deal.

“We continue to believe the case is meritless and baseless, but ultimately determined that it was best for our investors and our firm to put this matter behind us in light of the costs and distraction of six years of litigation,” Ernesto Anguilla, a Bain Capital spokesman, said in a statement.

Goldman’s statement said simply: “We’re pleased to put the matter behind us.”

Now that two powerful firms have broken ranks with the other defendants, the lawyers for the plaintiffs may gain additional bargaining power. The plaintiffs are seeking billions of dollars in damages, but because of the mechanics of antitrust law, the defendants could be liable for a multiple of that amount if they lose at trial.

Plaintiffs’ lawyers are likely to seek higher amounts than in the Goldman and Bain deals if settlements are reached with other firms.

“We are pleased that we’ve been able to enter into settlements with two of the leading firms in the private equity industry,” K. Craig Wildfang, a lawyer for the plaintiffs, said. “We believe this shows the strength of our case and we look forward to a trial in November of this year against the remaining defendants.”

The plaintiffs depicted rival private equity firms as having a cozy relationship with one another, using email evidence to bolster their case. The case focuses on “club deals,” in which multiple firms would team up — a tactic that was popular during the buyout boom but has since fallen from favor.

In September 2006, for example, when Blackstone and K.K.R. were circling the technology giant Freescale Semiconductor, Hamilton E. James, the president of Blackstone, sent a note to his colleagues about Henry R. Kravis, a co-founder of K.K.R. “Henry Kravis just called to say congratulations and that they were standing down because he had told me before they would not jump a signed deal of ours,” Mr. James wrote.

An unnamed Goldman executive, referring to the $17.6 billion takeover of Freescale, said that “club etiquette” had prevailed.

In another example, involving the $32.1 billion buyout of the hospital chain HCA, K.K.R. asked its competitors to “step down on HCA” and not bid, according to an email written by Daniel Akerson, who was then a partner at Carlyle.

A spokeswoman for K.K.R., Kristi Huller, said in a statement that the firm continued “to believe the litigation is without merit.”

A spokesman for Carlyle declined to comment, as did a spokeswoman for Blackstone.