DOJ antitrust division chief promises litigation to break director’s lockdowns

May 2, 2022

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The Justice Department’s Antitrust Division promised in a recent speech to strengthen enforcement of Section 8 of the Clayton Act, which prohibits competing companies from sharing common directors or officers. The prevailing enforcement climate means companies need to have a compliance plan in place to uncover potential ties between directors before developing and monitoring existing outside director positions to ensure they comply with existing section 8 exemption rules.


Jonathan Kanter, assistant attorney general in the DOJ’s antitrust division, said in an April 2022 speech that “[f]or too long, our application of Article 8 has essentially been limited to our merger review process.[1] The DOJ is “increasing its efforts to identify violations across the economy” and “will not hesitate to bring cases under Section 8 to break up interlocking directions.”[2]

Agencies have periodically issued Section 8 compliance warnings. In 2019, the FTC published a blog post, Mindfulness Interconnectionreminding companies of the need to avoid the overlapping of administrators, particularly in the event of a merger or demerger.[3] This followed a 2017 article advising that companies “[h]with a plan to comply with the bar on the horizontal locks”.[4] Kanter’s statements are a marked departure from the FTC’s 2017 guidance stating that the Commission “rely[s] on self-monitoring to prevent violations of Article 8”,[5] and indicate that the DOJ can take legal action to resolve potential lockdown issues.

Clayton Act, Section 8

Section 8 of the Clayton Act (15 U.S.C. § 19) prohibits a person from being an officer (defined as an “officer elected or selected by the board of directors”) or director of two corporations that are “under their business and location of operation, competitors.“Person” has a broader meaning than a natural person and includes only one business.[6] According to this interpretation, the same company could not appoint two different people as agents to sit on the board of directors or act as an officer of two competing companies.

Section 8 broadly defines “competitors” to include two companies where “the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.” Section 8 is broad and potentially applies where two competing corporations have a common officer or director, subject to certain exceptions.

There are three potential safe harbors under Article 8:

  1. Competitive sales of Is business account for less than 2% of that business’s total sales;
  2. Competitive sales of each business account for less than 4% of that business’s total sales; or
  3. Competitive sales of Is company are less than $4,103,400 in 2022.

Although there are no penalties or fines imposed due to a breach of Article 8, the law requires parties to remove the lockdown if a breach is found to have occurred. . There is a one-year grace period to remedy violations that occur after the lockdown has occurred (for example, competitive sales exceeding de minimis thresholds), provided the lockdown did not breach Article 8 when it first occurred.

An antitrust investigation into a potential foreclosure can force the resignation of key executives or directors, delay the closing of a proposed transaction, or trigger consumer class actions alleging collusion.

Section 8 Compliance in Today’s Regulatory Environment

As noted in a previous client alert, the DOJ took action against suspected lockdowns even before Kanter’s April 2022 statements. Companies must take proactive steps to detect interlocks before they happen and monitor those. that exist to ensure that they comply with the current section 8 of the safe harbors.

Companies whose directors or officers are being considered for an outside position should first assess the position for potential Section 8 concerns. Where a director or officer of one company holds an outside position at another subject company to a safe harbor due to either a lack of competition or a de minimis overlap, the attorney should periodically re-evaluate the relationship to ensure market developments do not impede the position in violation of Section 8. This may occur due to sales growth in overlaps existing ones or the entry into new sectors of activity. These checks can be incorporated into existing director/officer independence analyses.

Companies engaged in financial transactions, such as spin-offs where directors or officers of the parent company may hold positions within the spin-off, should consider whether the parent company and the spin-off can compete with each other in any industry of activity and assess potential problems in Section 8.

Private equity firms holding board seats or appointing officers in multiple portfolio companies should carefully consider whether any of them might be considered “competitors” for the purposes of Section 8.

Other antitrust laws, particularly Section 1 of the Sherman Act (which prohibits agreements that unreasonably restrict trade), continue to apply even if the lockdown is within Section 8 safe areas. A strong compliance body will therefore also establish procedures to prevent the sharing of competitively sensitive information and prevent potential competition issues from arising.


[1] Assistant Attorney General Jonathan Kanter delivers opening remarks at the 2022 Spring Enforcers SummitApril 4, 2022, available on:

[2] Identifier.

[3] Michael E. Blaisdell, Mindfulness InterconnectionJune 26, 2019, available on:

[4] Debbie Feinstein, Have a plan to comply with the bar on horizontal locksJanuary 23, 2017, available at:

[5] Identifier.

[6] Mindfulness Interconnection (Section 8 “prohibits not only a person from acting as an officer or director of two competitors, but also any person solidify to appoint two different people to serve as its proxies as officers or directors of competing companies”).

The following Gibson Dunn attorneys prepared this Client Alert: Daniel Swanson, Rachel Brass, Cynthia Richman and Chris Wilson.

Gibson Dunn attorneys are available to answer any questions you may have regarding the issues discussed in this update. Please contact the Gibson Dunn attorney with whom you usually work, any member of the firm Antitrust and Competition, Mergers and Acquisitions, Private Equity, or Securities Regulation and Corporate Governance practice groups, or the following practice leaders:

Antitrust and Competition Group:
Rachel S. Brass – San Francisco (+1 415-393-8293, [email protected])
Stephen Weissman – Washington, DC (+1 202-955-8678, [email protected])
Ali Nikpay – London (+44 (0) 20 7071 4273, [email protected])
Christian Riis-Madsen – Brussels (+32 2 554 72 05, [email protected])

Mergers and Acquisitions Group:
Eduardo Gallardo – New York (+1 212-351-3847, [email protected])
Robert B. Little – Dallas (+1 214-698-3260, [email protected])
Saee Muzumdar – New York (+1 212-351-3966, [email protected])

Private equity group:
Richard J. Birns – New York (+1 212-351-4032, [email protected])
Wim De Vlieger – London (+44 (0) 20 7071 4279, [email protected])
Federico Fruhbeck – London (+44 (0) 20 7071 4230, [email protected])
Scott Jalowayski – Hong Kong (+852 2214 3727, [email protected])
Ari Lanin – Los Angeles (+1 310-552-8581, [email protected])
Michael Piazza – Houston (+1 346-718-6670, [email protected])

Securities Regulation and Corporate Governance Group:
Elizabeth Ising – Washington, DC (+1 202-955-8287, [email protected])
James J. Moloney – Orange County (+1 949-451-4343, [email protected])
Lori Zyskowski – New York (+1 212-351-2309, [email protected])

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Publicity for Lawyers: The attached materials have been prepared for general information purposes only and are not intended to provide legal advice.

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