DOJ Antitrust Investigation Results in Five Resignations from Corporate Boards
The Department of Justice is conducting a broad review of potentially unlawful practices under Section 8 of the Clayton Antitrust Act. As a result, DOJ announced yesterday that several companies have taken immediate action to correct potential Section 8 violations without admitting liability.
Section 8 of the Clayton Antitrust Act (Section 8) prohibits directors and officers from serving simultaneously on the boards of competitors, subject to limited exceptions. This provision is viewed as a “preventative tool intended to avert collusion before it occurs.”
In April, DOJ’s Antitrust Division leader Assistant Attorney General Jonathan Kanter announced the Division’s intention to increase antitrust actions, including through use of Section 8. “[W]e are committed to litigating cases using the whole legislative toolbox that Congress has given us to promote competition. One tool that I think we can use more is Section 8 of the Clayton Act. … We are ramping up efforts to identify violations across the broader economy and we will not hesitate to bring Section 8 cases to break up interlocking directorates,” Kanter said.
In June, DOJ’s Antitrust Division Deputy Assistant General Richard A. Powers echoed this message by announcing a record number of open investigations into antitrust issues.
In response to the Department’s focus on Section 8, DOJ announced this week that the following companies and directors resigned from board positions that may have stuck compliance issues with Section 8:
· Definitive Healthcare Corp. and ZoomInfo Technologies Inc. – Definitive and ZoomInfo operate 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 in response to the Division’s concerns about the alleged interlock.
· Maxar Technologies Inc. and Redwire Corp. – Maxar and Redwire are providers of space infrastructure and communications products and services. One director served simultaneously on the boards of both companies and resigned from Redwire’s board in response to the Division’s concerns about the alleged interlock.
· Littelfuse Inc. and CTS Corp. – Littelfuse and CTS are manufacturers of components and technologies for use in transportation applications, including sensors and switches for use in passenger and commercial vehicles. One director served simultaneously on the boards of both companies and resigned from CTS’s board in response to the Division’s concerns about the alleged interlock.
· Skillsoft Corp. and Udemy Inc. – Skillsoft and Udemy are providers of online corporate education services. One director served simultaneously 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 in response to the Division’s concerns about the alleged interlock.
· Solarwinds Corp. and Dynatrace, Inc. – Solarwinds and Dynatrace are providers of 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 Thoma Bravo on both boards at the same time. Two additional directors also represented Thoma Bravo on the Solarwinds board. All three directors resigned from Solarwinds’s board in response to the Division’s concerns about the alleged interlock.
“Section 8 is an important, but underenforced, part of our antitrust laws. Congress made interlocking directorates a per se violation of the antitrust laws for good reason. Competitors sharing officers or directors further concentrates power and creates the opportunity to exchange competitively sensitive information and facilitate coordination – all to the detriment of the economy and the American public,” said Assistant Attorney General Kanter. “The Antitrust Division is undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law.”