KKR has agreed to the largest premerger penalty the Justice Department has ever collected, and the judgment imposing it expires the day the money arrives

KKR has agreed to pay a civil penalty of $250,000,000, which the Justice Department says is more than twenty times any it has previously obtained under the law requiring companies to declare their deals before closing them.

The Antitrust Division filed the proposed consent judgment in the Southern District of New York on Wednesday. The case is nineteen months old. It resolves United States v. KKR & Co. Inc., brought on 14 January 2025 under Section 7A of the Clayton Act, the provision everybody calls the Hart-Scott-Rodino Act, and the defendant that pays is KKR & Co. GP LLC of 30 Hudson Yards. Associate Attorney General Stanley E. Woodward Jr. described the figure as "more than 20 times any prior HSR penalty obtained by the DOJ".

The requirement is procedural. Above a size threshold, the parties to a transaction must tell the Antitrust Division and the Federal Trade Commission before they close it, so that the agencies have a chance to look at the deal under Section 7 of the Clayton Act, which is the section that actually prohibits anticompetitive mergers. Penalties run at more than $50,000 a day per violation. The department says its complaint alleged that KKR evaded review for at least 16 transactions in 2021 and 2022, that documents were altered in the filings for at least eight of them, that no filing at all was made for at least two, and that required documents were systematically omitted from at least ten, against a base of more than 100 premerger filings the firm was required to make from 2021 onwards.

What the judgment requires after the money is paid

Nothing.

Section X of the proposed Final Judgment runs to a single sentence, and it is the shortest operative provision in the document: the judgment, "including all compliance obligations set forth herein, will expire upon payment in full" of the penalty. Payment is due within 30 calendar days of entry, by wire transfer, with interest at 18 percent a year on any default. There is no monitor, no compliance report, and no term of years.

Three paragraphs the announcement does not mention

The judgment carries a set of express securities carve-outs. They cover four separate statutes and one exemption.

It states that disqualification under Rule 506(d)(1)(ii) will not arise from entry, so the settlement does not make KKR a bad actor for the private placement exemption a great deal of private fundraising runs through. It says the same of Rule 262 under Regulation A. It records that nothing in it is intended to enjoin the firm in a way that would trigger disqualification under Section 9(a) of the Investment Company Act, or give rise to proceedings under Section 15(b)(4)(C) of the Securities Exchange Act or Section 203(e)(4) of the Investment Advisers Act. And it notes that the Antitrust Division has made no finding on eligibility under the Labor Department's Prohibited Transaction Class Exemption 84-14, which is the exemption a manager relies on to handle pension money.

KKR consented without trial and without adjudication of any issue of fact or law, and the judgment says in terms that it is not evidence against, or an admission by, any party. Fourteen named KKR funds and holding entities are dismissed with prejudice on entry. The release reaches the firm, its portfolio companies and their current and former affiliates, officers and advisers, for any failure to comply with Section 7A before the complaint was filed.

It is not entered yet

The Antitrust Procedures and Penalties Act sits between the filing and the signature. The judgment and a competitive impact statement must be published, KKR must arrange and pay for a newspaper notice whose text the United States writes in its sole discretion, and comments are open for 60 days from the later of that notice or Federal Register publication. Until the court signs, the United States may withdraw its consent.