FTC resolves director interlock by requiring firm to appoint independent directors

On September 16, 2026, the U.S.  Federal Trade Commission (FTC) announced that it had simultaneously issued a complaint and accepted a proposed consent order related to an agreement between two large firearm manufacturers, Beretta Holding S.A. (Beretta) and Sturm, Ruger & Co. Inc. (Ruger), pursuant to which Beretta would acquire up to 25% of Ruger and receive the right to nominate two directors to Ruger’s board. The complaint alleged that the agreement created an illegal interlocking directorate between the two firms, and the order resolved these concerns by barring Beretta from appointing or nominating Ruger directors unless these individuals are wholly independent of Beretta. 

Challenged conduct

Section 8 of the Clayton Act prohibits a person from simultaneously serving as an officer or director of two competing corporations, subject to certain exceptions.  Under the “deputization” theory advanced by the antitrust agencies, firms may violate Section 8 if different individuals, acting as agents of the same firm, serve as officers or directors of competing corporations.  During the Biden administration, the antitrust authorities prioritized Section 8 enforcement, with several directors affiliated with private equity and other firms resigning from corporate boards to resolve director interlock investigations initiated by the Antitrust Division of the Department of Justice (DOJ) and FTC.[1]  The Beretta/Ruger consent order marks the second Section 8 enforcement action under the Trump administration.[2]

This consent order arose from an agreement that allowed Beretta to acquire up to 25% of Ruger’s outstanding shares and to appoint two members of Ruger’s board of directors.  Beretta and Ruger are both firearm manufacturers and did not dispute that the companies were competitors within the meaning of Section 8.  Notably, the FTC did not allege that Beretta’s investment in Ruger itself would violate the antitrust laws, instead focusing on the board rights.  Although the agreement required the proposed directors to “qualify as ‘independent’” of Beretta, the FTC noted that the agreement also allowed “the waiver of certain independence requirements.” As a result, the FTC alleged that the agreement lacked “fulsome requirements” of independence, “as is required by Section 8.” 

Independent directors may address Section 8 concerns, subject to appropriate guardrails

The consent order resolves the FTC’s allegations by requiring that the individuals Beretta nominates to serve on Ruger’s board be wholly independent of Beretta.  In particular, the order requires that these directors not have the following relationships with Beretta or various associated entities (the Beretta entities):

• The director must not be affiliated with (and must not be an immediate family member of anyone affiliated with) the Beretta entities. 
• For the prior three years, the director must not have served as an employee, officer, director, representative or agent of the Beretta entities, received direct or indirect compensation from them or served as a partner or employee of a firm that acted as their internal or external auditor. 
• The director must not have any other material relationship with the Beretta entities, individuals affiliated with them or those individuals’ immediate family members.  A material relationship includes any relationship that “would reasonably be expected to impair the objectivity of the Independent Director’s judgment when participating as a director of Ruger.” 

The consent order also restricts the flow of information from the directors to Beretta.  Specifically, Beretta may not enter into any relationship with those directors that would involve sharing Ruger’s nonpublic information with the Beretta entities during the course of the director’s service on Ruger’s board and for one year after the conclusion. 

Key takeaways

While the consent order is a negotiated settlement rather than a litigated court decision with the force of law, these requirements serve as a guide for how firms may structure board rights in compliance with Section 8 of the Clayton Act: 

• Shift in Resolution of Section 8 Concerns: This consent order reflects a shift in approach from other recent Section 8 investigations, which were resolved by parties abandoning board seats to unwind interlocks. 
• Scope of Deputization Theory: While the agencies have taken the position that Section 8 issues can arise even if no single individual serves as an officer or director of two competitors, this “deputization” theory requires that two employees or agents of the same firm serve as officers or directors.  With guardrails to ensure that a director (i) is not an agent of the nominating firm, (ii) maintains independence and (iii) does not share competitively sensitive information with the nominating firm, it may be possible to preserve board rights in compliance with Section 8.  Parties should work closely with antitrust counsel to confirm that any independence protections are appropriate and defensible. 
• Section 8 Issues Can Arise in Minority Investments That Do Not Otherwise Raise Competitive Concerns: The Beretta/Ruger consent order is a reminder that parties can run afoul of Section 8 even if the agency does not allege that the underlying transaction raises competitive concerns.  Parties to transactions involving board seats should do a fulsome Section 8 review and consider potential compliance protocols where needed.