The Federal Trade Commission has announced revised thresholds for interlocking directorates required under Section 8 of the Clayton Act (15 U.S.C. § 19(a)(5)). The revised thresholds take effect January 25, 2011.

Background

Section 8 of the Clayton Act specifically prohibits, with certain exceptions, a person from serving as a director or officer of two competing corporations if the two thresholds detailed below are met.

Basic Provisions

Section 8 prohibits individuals from serving as directors or board elected or appointed officers of two competing corporations (other than banks, banking associations, and trust companies) where:

• Each corporation has capital, surplus and undivided profits in excess of $26,867,000 (amount adjusted annually) and is engaged in interstate commerce; and

• Competitive sales of the corporations exceed the de minimis standards described below.

Safe Harbors

Interlocking directorates or officers will not violate Section 8 if:

• Competitive sales of either corporation are less than $2,686,700 (amount adjusted annually);

• Competitive sales of either corporation are less than 2 percent of its total sales; or

• Competitive sales of each corporation are less that 4 percent of its total sales.

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