UPDATE 1-Eight firms must face deal collusion lawsuit -U.S. judge
* Apollo, Providence dismissed from case, eight remain
* Bain, Blackstone, Carlyle, Goldman, others still in case
* Shareholders allege conspiracy not to "jump" others' deals
July 18 (Reuters) - A federal judge on Thursday allowed investors to pursue a closely watched lawsuit accusing several of the world's largest private equity firms of colluding to depress prices on companies they sought to buy.
While dismissing two defendants from the case, U.S. District Judge Edward Harrington in Boston on Thursday allowed claims on whether eight other defendants were part of an overarching conspiracy not to outbid each other after transactions were announced, a practice known as "jumping."
Harrington rejected requests by Bain Capital Partners LLC, Blackstone Group LP, Carlyle Group LP, Goldman Sachs Group Inc's private equity arm, KKR & Co, Silver Lake Partners, Thomas H. Lee Partners LP and TPG Capital Management LP to be dismissed from the lawsuit.
He said the evidence was strong enough to allow claims that these firms were not acting independently when deciding not to jump each other's bids.
Apollo Global Management LLC and Providence Equity Partners Inc, in contrast, won dismissal.
The plaintiffs include shareholders in formerly publicly traded companies that were bought by the private equity firms between 2003 and 2007.
They had accused the firms of conspiring to deflate prices, sometimes by 10 percent, in 27 transactions valued at roughly a quarter trillion dollars.
Among the target companies were casino operator Harrah's, hospital chain HCA, pipeline operator Kinder Morgan, arts and crafts retailer Michaels Stores, toy store chain Toys 'R' Us, power company TXU and Spanish language network Univision.
Much of the case was built on emails that the plaintiffs said reflected an implicit understanding, described in one email as "club etiquette," not to interfere with each others' deals.
Christopher Burke, a lawyer for the shareholders, did not immediately respond to a request for comment.
Joseph Tringali, who has argued in court on behalf of the defendants, was not immediately available for comment.
An Apollo spokeswoman had no immediate comment. A Providence spokesman did not immediately respond to a request for comment.
The case is Dahl et al v. Bain Capital Partners LLC et al, U.S. District Court, District of Massachusetts, No. 07-12388.