In this memo, Goodwin Procter reviews recent FTC & DOJ enforcement activity dealing with the Clayton Act’s prohibition on director interlocks – and offers some practical compliance advice:
– Be sure to include a component on the antitrust laws in your corporate compliance policies. This will ensure that all Board members, officers, and employees are well aware of the law.
– Perform a compliance check at least yearly by asking your Board members, officers, and employees if they serve on other Boards.
– Know who you are from top to bottom; be aware if any subsidiaries or affiliates compete with any other entities in which the company is also invested – whether directly or indirectly
– Be conscious of your firm’s identity. As a firm’s mission shifts or it acquires or expands into new product lines, it may become newly competitive with other firms. Director interlocks violations certainly can emerge as these shifts take place.
– In any transaction where Board seats may shift, be sure to add a interlocks check to the closing checklist.
– Be mindful that even if there isn’t a technical violation, there could be conflict of interests implicated by dual-Board service.
This memo from Philip Giordano of Kaye Scholer weighs in on the implications of the DOJ’s enforcement activity on taking board seats & minority ownership stakes in a competitor.
– John Jenkins