Apollo Global Management and several other firms are facing an antitrust lawsuit alleging they systematically blocked debt refinancing deals, inflating borrowing costs for companies and enriching themselves, the U.S.Department of Justice announced Thursday. The DOJ alleges the firms, which include Vista Credit Partners and Ares Management, colluded to avoid competing with each other when providing financing to companies seeking to refinance existing debt, effectively creating a cartel.
The lawsuit centers on “club deals” – privately negotiated loan agreements – where the firms allegedly agreed not to pursue deals that would undercut each other, resulting in higher interest rates and stricter terms for borrowers. The DOJ contends this practice harmed businesses across various sectors, increasing financial strain and potentially hindering growth.The complaint alleges these actions violated the Sherman Antitrust Act.
The firms accused – Apollo, Vista, Ares, and others – are major players in the private credit market, managing billions of dollars in assets. According to the DOJ, the alleged conspiracy spanned from at least 2018 and involved dozens of deals. The department seeks to halt the alleged anti-competitive practices and is pursuing civil penalties.
“american companies rely on competitive credit markets to invest and grow,” said Assistant Attorney General jonathan Kanter of the Justice Department’s Antitrust Division in a statement. “The Department will vigorously enforce the antitrust laws to ensure that private credit firms compete fairly and do not exploit borrowers.”
The lawsuit details instances where the firms allegedly discussed and coordinated their approach to potential deals,sometimes explicitly agreeing to “pass” on opportunities to avoid bidding wars. In one example cited in the complaint, Apollo allegedly informed Vista that it would not pursue a refinancing deal for a specific company, allowing Vista to proceed with more favorable terms.
Apollo, Vista, and Ares have all denied the allegations and stated their intention to vigorously defend themselves against the lawsuit. “Apollo is confident that the facts will demonstrate that the firm acted lawfully and in the best interests of its clients and the borrowers it serves,” a spokesperson for Apollo said in a statement.Vista and Ares issued similar statements asserting their commitment to fair competition.
the case is being closely watched by industry observers, as it could have significant implications for the rapidly growing private credit market. A prosperous outcome for the DOJ could lead to increased scrutiny of lending practices and potentially reshape the landscape of corporate finance. The lawsuit seeks injunctive relief to prevent future anti-competitive conduct and monetary damages for affected borrowers.
