FTC Continues Clayton Section 8 Enforcement Efforts on Interlocking Directorates

The Federal Trade Commission said three individuals resigned from the board of Sevita Health after the agency raised concerns about interlocking directorates with Beacon Specialized Living Services. The FTC said the directors simultaneously served on the boards of both companies, which offer services to individuals with intellectual and developmental disabilities and share common private equity ownership. The resignations resolved the competition concerns, according to the agency. The action reflects continued enforcement of Section 8 of the Clayton Act, which prohibits directors and officers from serving simultaneously on the boards of competing corporations unless certain exceptions apply. The FTC and the Justice Department have broadened scrutiny to include observer rights and arrangements that could result in common representation among competitors. The agencies also view Section 8 as applying to private equity firms despite the statutory reference to corporations. The FTC's Director of the Bureau of Competition encouraged all firms to review board memberships to avoid overlaps with competitors, including when new board members are added as a result of investments by private equity firms or other new shareholders. The FTC praised the companies for working with the agency to resolve the issue quickly.