U.S. Justice Department Requires Restructuring of Transaction Involving Foreign Entities to Address Section 8 Interlocking Directorates Concern

On July 14, 2016, the United States Department of Justice announced that it had concerns that a transaction involving two foreign electronic trading platforms would have, as originally structured, violated Section 8 of the Clayton Act. The parties restructured the transaction to address those concerns.1 Section 8 of the Clayton Act generally prohibits the same “person” from simultaneously serving “as a director or [board-appointed] officer in any two corporations . . . that are . . . competitors” unless certain highly technical safe-harbor criteria are met.2 Section 8 covers both “direct” interlocks – i.e., when the same individual serves as a director or officer of competing corporations – and “indirect” interlocks – i.e., where different individuals serve as directors or officers of competing corporations, but both act on behalf of the same third entity (e.g., a private equity fund). As the Department of Justice noted, the purpose of Section 8 is “to nip in the bud incipient violations of the antitrust laws by removing the opportunity or temptation to such violations through interlocking directorates.”