How PE firms can prepare for the DOJ’s Section 8 crackdown on interlocking directorates across portfolio companies

May 18, 2023
Boardroom Meeting

In this article, published in Private Equity Law Report, CRA consultants discuss the renewed push by the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) to enforce Section 8 of the Clayton Antitrust Act of 1914 (Clayton Act). Specifically, the concern targeted by the DOJ is the existence of interlocking directorates where the same individuals serve on the boards of multiple companies competing in the same industry or market, resulting in unlawful information sharing and coordination.

The DOJ’s efforts should spur the CCOs and GCs of PE firms to take a proactive approach to preventing challenges to board selections for their portfolio companies. The authors detail the operative elements of Section 8 of the Clayton Act; recent DOJ and FTC enforcement efforts against violators; ways PE sponsors are uniquely susceptible to those risks; key factors for the agencies to find an unlawful interlock; and steps PE firms can take to mitigate those risks.