Arguably they shouldn't be allowed to exist: They use what seem to be loopholes in corporate law to run what are essentially embezzlement schemes. If a lone person runs an embezzlement scheme, that's possibly a felony charge. It shouldn't be a loophole that a company can do it just fine without repercussions when we know a lone individual doing it is a crime.

The two problems in why they are allowed to exist are enforcement and probably legislation. Legislation is needed to close any actual loopholes in the law and/or just explicitly say things like "Leveraged Buy Outs are illegal". Enforcement is getting courts to see this as a crime and prosecute it as such. They may be waiting for legislation before they feel confident enforcing it.

Fixing those problems is certainly easier said than done.

(ETA: Also some of this is classic Anti-Trust violations. Trusts/Monopolies are still illegal. Enforcement has been somewhat negligent in the US this century and some of these deals cross too many country borders making enforcement in general harder. In this specific case, a US private equity firm buying a Japanese company, who enforces the anti-trust issue, especially if the Japanese company was already a de facto local monopoly before joining the international one?)

In principle, private equity firms could be a net positive: they could take over a business that's failing or just not living up to its potential, and turn around the management of it to improve it for all concerned. They often market themselves on this concept. In practice it rarely seems to work this way, where either they fail to make any return on their investment or they basically do this kind of monopolising, short-term extortion of customers. Often both.

(Patrick Boyle has a video on them from the financial side if you want some details: https://www.youtube.com/watch?v=bfUOPDOLHvE TLDW: they often aren't a great deal for investors, either)