ARTICLE
27 January 2016

FTC Announces Revised Thresholds For Interlocking Directorates - January 22, 2016

RG
Ropes & Gray LLP

Contributor

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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)).
United States Antitrust/Competition Law

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 will take effect upon publication in the Federal Register, which is expected shortly. 

As revised, with certain exceptions, Section 8 prohibits a person from serving as a director or officer of two competing corporations (other than banks, banking associations, and trust companies) if each corporation has capital, surplus and undivided profits in excess of $31,841,000 (increased from $31,084,000) and the competitive sales of both corporations equal or exceed $3,184,100 (increased from $3,108,400). Note that a person shall not be prohibited from simultaneous service if the competitive sales of either corporation are less than 2 percent of its total sales or the competitive sales of each corporation are less than 4 percent of its total sales.

"Competitive sales" are defined as the gross revenues for all products and services sold by one corporation in competition with the other during its most recent fiscal year. "Total sales" are defined as gross revenues for all products and services sold by one corporation in the corporation's most recent fiscal year.

The question of whether any of safe harbors apply in a given situation may be complex.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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