Apollo Global Management andโ several other firms are facingโ an antitrust lawsuit alleging they systematically blocked โdebt refinancing deals, inflating borrowing costs for companies and enriching themselves, the U.S.Department of Justice announced Thursday. The DOJ alleges โขthe firms, โwhich include Vista Credit Partners and Ares Management, colluded to avoid competing with each otherโฃ when providing financing to companies seekingโ to refinance โคexisting debt, effectively creating a cartel.
The lawsuit centers on “club deals” – โprivatelyโ negotiated โloan agreements – where the โคfirms allegedlyโ agreed not to pursue deals that wouldโข undercut each other, resulting in higher interest rates and stricter termsโ 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 โothers – are major players in the private credit market,โ managing billions of dollars in assets. According to the DOJ, the alleged conspiracy spanned from at least 2018โค and involved dozens of deals. Theโ department seeks to halt the alleged anti-competitive โpractices and is pursuing civil penalties.
“american companies rely on competitive โขcredit markets to invest and grow,” said Assistant Attorney General jonathan Kanter of the Justice Department’s Antitrust Divisionโ in โขa statement. “Theโค Department will vigorously enforce the antitrust laws โto ensure that private credit firms compete fairly and do not โคexploit borrowers.”
The lawsuit details instances whereโฃ the firms allegedly discussed and coordinated their approach to potential deals,sometimes explicitly agreeing โto “pass” on opportunities to avoid โbidding wars. In one โexample cited in the complaint, Apollo allegedly โinformed Vista that it would โคnot pursue a refinancing deal for a specific company, allowing Vista toโข proceed withโ more favorable terms.
Apollo, Vista, and Ares have all โคdenied the allegations and stated their โintention to vigorously โdefend themselves against the lawsuit. “Apollo is confident that the facts will demonstrate that the firm acted lawfully and in the best interests of its clientsโ 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 โฃimplicationsโ for the โคrapidly โฃgrowing private credit market. A prosperous outcome for the DOJ could lead toโ increased scrutiny of lending practices and potentially reshape โthe landscape of corporate finance. The lawsuit seeks injunctive relief to prevent future anti-competitive conduct and monetary โdamages for affected borrowers.