The Director Interlock Problem

The Federal Trade Commission (FTC) recently reached a consent decree with firearms manufacturers Beretta Holding S.A. (Beretta) and Sturm, Ruger & Co. Inc. (Ruger),¹ prohibiting Beretta from appointing anyone to Ruger's board unless that person is independent of Beretta. The order settles allegations that a proposed stock deal between Beretta and Ruger wherein Beretta could purchase up to 25% of competitor Ruger's outstanding shares and nominate two directors to Ruger's board of directors would create an illegal interlocking directorate in violation of Section 8 of the Clayton Act, a federal antitrust statute that prohibits a single "person" from serving as a director or officer of two or more competing corporations.

The proposed consent order imposes several conditions on Beretta. First, Beretta may nominate to Ruger's board only directors who are "independent," with no material financial, employment, or familial relationship with Beretta or its affiliates. Second, Beretta must provide advance notice to the FTC before nominating any director to Ruger's board. Third, Beretta is prohibited from entering into any financial relationship with any independent director it nominates, including compensation, consulting arrangements, or other economic ties that could compromise the director's independence until such individual has ceased serving on Ruger's board for a period of one year.

History of Section 8 Enforcement

The Beretta consent decree is the most recent example of Section 8 issues receiving increased attention. While Section 8 issues often arise in merger investigations, as in the case of Beretta, the Department of Justice (DOJ) and FTC have increasingly opened investigations outside the merger context as well. While Section 8 is most frequently applied to a single individual simultaneously serving on the boards of two competing corporations, DOJ and the FTC have also pursued a "deputization" theory, wherein an entity that places its designees on competing boards can itself be treated as the interlocking "person" under Section 8.

DOJ and FTC scrutiny of interlocking directorates has intensified markedly over the past several years. Although Section 8 has been on the books since 1914, enforcement historically resulted in quiet settlements rather than litigation. In 2022, then-Assistant Attorney General Jonathan Kanter referred to Section 8 as "one of the most underenforced antitrust laws and one of the most effective to strengthen competition through deconcentration."² In October 2022, DOJ announced that seven directors resigned from five public company boards following DOJ concerns that their roles violated Section 8.³ In March 2023, five more directors resigned from four boards in response to DOJ probes, with a heavy emphasis on private equity and technology.⁴ Resignations at Pinterest and Nextdoor followed in August 2023.⁵That same month, the FTC obtained a consent order in the EQT/Quantum matter, marking its first Section 8 action in approximately four decades⁶, and enforcement has continued under the current administration, leading to three resignations at Sevita Health in 2025.⁷

Practical Guidance for In-House Counsel

• Review board composition regularly. Map every seat your directors and officers hold and flag any overlap with actual or potential competitors. Identify any entities (such as private equity or venture capital sponsors) with which your directors are affiliated and determine whether representatives of those entities serve on the boards of competitors.
• Build Section 8 into compliance. Add interlock screening to board-appointment policies and antitrust compliance programs so issues surface early. Require board members periodically to review and update their involvement with other entities.
• Understand the de minimis exceptions. Section 8 contains safe harbors for interlocks involving corporations with less than a specified level of "capital, surplus, and undivided profits," or where the competitive overlap falls below certain thresholds. 15 U.S.C. § 19(a). These thresholds are adjusted annually by the FTC. Under the 2026 thresholds, interlocks are exempt if the combined "capital, surplus, and undivided profits" of each company are less than $54,402,000, or if the aggregate sales in which the corporations compete are less than $5,440,200. Counsel should calculate whether any interlock may qualify for an exemption before assuming a violation exists.

¹ Press Release, FTC, FTC Takes Action to Prevent Anticompetitive Arrangement in Beretta, Ruger Deal, https://www.ftc.gov/news-events/news/press-releases/2026/09/ftc-takes-action-prevent-anticompetitive-arrangement-beretta-ruger-deal?utm_source=govdelivery.

² Press Release, DOJ, Directors Resign from the Boards of Five Companies in Response to Justice Department Concerns about Potentially Illegal Interlocking Directorates (Oct. 19, 2022).

³ Press Release, DOJ, Resignations Reflect Antitrust Division's Efforts to Reinvigorate Enforcement and Deter Violations of Section 8 of the Clayton Act (Oct. 19, 2022), https://www.justice.gov/opa/pr/directors-resign-boards-five-companies-response-justice-department-concerns-about-potentially.

⁴ Press Release, DOJ, Justice Department's Ongoing Section 8 Enforcement Prevents More Potentially Illegal Interlocking Directorates (Mar. 9, 2023), https://www.justice.gov/opa/pr/justice-department-s-ongoing-section-8-enforcement-prevents-more-potentially-illegal.

⁵ Press Release, DOJ, Directors Resign From Boards of Pinterest and Nextdoor in Response to Justice Department Enforcement of Laws Prohibiting Interlocking Directorates (Aug. 16, 2023).

⁶ See generally Agreement Containing Consent Order, In the Matter of QEP Partners, LP et al., No. 221-0212 (2023), https://www.ftc.gov/system/files/ftc_gov/pdf/2210212eqtquantumacco.pdf.

⁷ Press Release, FTC, Three Directors Resign from Sevita Board of Directors in Response to the FTC's Ongoing Enforcement Efforts Against Interlocking Directorates (Sept. 15, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/09/three-directors-resign-sevita-board-directors-response-ftcs-ongoing-enforcement-efforts-against.