A game changer for competitive M&A transactions? Federal Court passes judgment on bidding tactics

A mining consumables company was sold to a private equity firm. Seven hours later, the company was on-sold at a $22m premium to a competing Australian mining consumables company well known to the private equity firm. The Federal Court found that arrangements between the private equity firm and the ultimate buyer involved cartel conduct in breach of the Competition and Consumer Act 2010(Cth) (CCA). The court awarded the vendor damages equal to the premium paid by the ultimate buyer.

Norcast S.ár.L v Bradken Limited (No 2) [2013] FCA 235 is the first case in which the new cartel provisions of the CCA have been applied and highlights the broad application of the bid-rigging provisions. In this case, an Australian company and an American private equity firm were found to have breached the CCA in relation to their conduct in a sales process conducted overseas. The decision contains some important lessons for investment banks and private equity firms involved in competitive sale processes...

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