Antitrust Division Keeps on Pushing and Announces Initial Settlements of Potentially Illegal Interlocking Directorates
The Antitrust Division announced last year that it intended to reinvigorate enforcement of Section 8 of the Clayton Act, which prohibits directors and officers serving simultaneously on the boards of competitors (with limited exceptions).
Assistant Attorney General Jonathan Kanter continues to implement his aggressive agenda unfazed by his mixed record of success in litigation. In particular, the Antitrust Division has an uneven record in its criminal prosecutions, particularly in the chicken processing industry, and its civil merger enforcement actions in which it lost three significant cases. Despite this mixed record, AAG Kanter presses forward. He is committed to this plan and fully recognizes that turning antitrust caselaw to reflect current economic analysis and theory takes time.
In its first enforcement effort, the Antitrust Division announced that seven directors resigned from their positions at five separate companies in response to concerns raised by the Antitrust Division. As interpreted by DOJ, Section 8 made interlocking directorates a per se violation of the antitrust laws. Competitors sharing officers or directors concentrates power and creates opportunities to exchange competitively sensitive information and facilitate coordination. The Antitrust Division intends to review further corporate board memberships for additional prosecutions.
The five specific settlements involved the following interlocking situations:
1. Definitive Healthcare Corp. and ZoomInfo Technologies Inc.: Definitive and ZoomInfo compete in providing go-to-market information and intelligence platforms used by third-party sales, marketing, operations and recruiting teams across the United States. One director served simultaneously on the boards of both companies and resigned from Definitive’s board.
2. Maxar Technologies and Redwire Corp.: Redwire and Maxar provide space infrastructure and communications products and services. One director served simultaneously on the boards of both companies and resigned from Redwire’s board.
3. Littlefuse Inc. and CTS Corp.: Littlefuse and CTS manufacture components and technologies for use in transportation applications, including sensors and switches used in passenger and commercial vehicles. One director served simultaneously on the boards of both companies and resigned from CTS’s board.
4. Skillsoft Corp. and Udemy Inc.: Skillsoft and Udemy provide online corporate education services. One director served simultaneously on the on the boards of both companies, as did the investment firm Prosus, through that director, because he represented Prosus on both boards at the same time. The director resigned from Udemy’s board.
5. Solarwinds Corp. and Dynatrac Inc.: Solarwinds and Dynatrac provide Application Performance Monitoring (APM) software. One director served simultaneously on the boards of both companies, as did the investment firm Thoma Bravo, through this director, because he represented Thama Bravo on both boards at the same time. Two other directors also represented Thoma Bravo on the Solarwinds board. All three directors resigned from Solarwind’s board.
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