Private Equity Firms Escape Antitrust Liability for Joint Bidding Activity

March 07, 2008
In Pennsylvania Avenue Funds v. Borey, a federal district court dismissed a purported antitrust class action suit on February 21, 2008, against two private equity firms over their joint bid to purchase WatchGuard Technologies Incorporated. Plaintiffs in the suit—former shareholders of WatchGuard—claimed they were harmed by the joint bidding activity, which they alleged had the direct effect of lowering the sale price. The district court granted defendants’ motion to dismiss, with prejudice, finding (a) the joint bidding conduct was not per se unlawful under the antitrust laws and (b) the joint bidding activity did not violate the antitrust laws under the “rule of reason.” This update analyzes the decision and its implications.