Google announced today that Arthur D. Levinson resigned from its board of directors. However, Mr. Levinson remains on Apple’s board of directors. Mr. Levinson was the remaining common director on the Google and Apple boards. As reported in the June 3, 2009 Post, Eric D. Schmidt, Google’s CEO, resigned from Apple’s board amid antitrust concerns raised by the FTC. The June 3 Post noted that it was unclear whether the FTC would require Mr. Levinson’s resignation from one of the boards. Apparently, the FTC did just that as FTC Chariman Jon Leibowitz said, “Google, Apple and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues, and for their willingness to resolve our concerns without the need for litigation.” Chairman Leibowitz further warned, “[b]eyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.” It seems that the FTC is warning corporations that it plans to take an increased interest in enforcing section 8 of the Clayton Act, which prohibits interlocking directorates among competitors under some circumstances. That statute has not been enforced with much frequency. Nevertheless, antitrust practitioner always have to be concerned that the existence of common directors could be used as evidence of a conspiracy between the two corporations in violation of the Sherman Act because it provides an opportunity to conspire. Accordingly, antitrust practitioners know to advise against such overlaps among corporations vulnerable to Sherman Act litigation without regard to section 8 of the Clayton Act.
Oct
13
Posted by : | On : October 13, 2009
Aug
03
Posted by : | On : August 3, 2009
Eric Schmidt, Google’s CEO, resigned today from Apple’s board of directors because the increased competition between Google and Apple raised conflicts for him that precluded his participation in many of Apple’s business decisions. It is unclear whether his resignation was in response to an inquiry by the FTC into Google’s and Apple’s interlocking directorates first reported on May 5, 2009 by the New York Times. Section 8 of the Clayton Act forbids competitors from having common directors and has been interpreted broadly. Nevertheless, it is a toothless statute that is rarely enforced and imposes no penalties for violations. The offending director must simply resign from one board. In this case, it is unclear whether the FTC has undertaken to enforce the statute as Arthur Levison remains on the boards of Google and Apple. His presence on both boards would seem to violate Section 8. It should be noted, however, that the genuine issue that can arise from interlocking directorates is that it can provide circumstantial proof of a conspiracy in violation of Section 1 of the Sherman Act. If the two firms engage in parallael conduct, for example, plaintiffs might allege that the companies had an opportunity to conspire through the common directors. Thus, antitrust practitioners advise companies to avoid interlocking directorates where meaningful competition between the two companies exists.