Interlocking Directorates and Officers – Section 8 of the Clayton Act

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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.

Please see full alert below for more information.

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Published In: Antitrust & Trade Regulation Updates, Business Organization Updates, Civil Remedies Updates, Mergers & Acquisitions Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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