Davis Polk partner Jesse Solomon spoke with Corporate Counsel about the FTC’s recent consent degree announced in mid-August that requires major changes to Quantum Energy Partners’ purchase of a major stake in Pittsburgh-based natural gas producer EQT.

The key terms of the proposed order include requiring Quantum to forego its right to a seat on EQT’s Board and unwinding a pre-existing joint venture, The Mineral Company, between EQT and Quantum. This is notable for three key reasons: (1) it confirms the FTC’s focus on enforcing the interlocking directorate prohibition; (2) it involves an enforcement against a non-corporate interlock; and (3) it shows a willingness to use a merger review to unwind preexisting joint ventures.

“What the FTC has done in going beyond the express authority conferred by Congress is controversial,” Jesse explained.

Corporate Counsel also referenced Davis Polk’s client update on the matter, which noted that the FTC action involving Quantum and EQT is a consent decree and not binding on the courts. However, in advance of potential merger reviews, companies should proactively evaluate possible non-corporate interlocks and existing bi-lateral relationships, “including those arising from a potential transaction.”

Antitrust Enforcers Throw Wrench Into M&A by Dusting Off Long-Ignored Governance RuleCorporate Counsel (September 11, 2023) (subscription required)