The Federal Trade Commission recently announced an enforcement action addressing an interlocking directorate tied to Beretta Holding's minority share acquisition in Sturm, Ruger & Co., highlighting federal regulators' ongoing focus on Section 8 of the Clayton Act.
According to a legal memorandum published on the Harvard Law School Forum on Corporate Governance by Cooley LLP partners and special counsels, the proposed FTC consent order resolves allegations that the investment agreement violated antitrust laws. The arrangement originally allowed Beretta to appoint two members to Ruger's board of directors. Because Beretta and Ruger operate as direct horizontal competitors in the manufacturing and sale of firearms, the FTC maintained that the board placement constituted an illegal interlocking directorate.
Under Section 8 of the Clayton Act, it is strictly prohibited for the same person or corporate representative to serve as an officer or director across competing companies that meet specified statutory size thresholds, regardless of whether the arrangement results in actual anticompetitive effects. In the Beretta-Ruger matter, the FTC claimed the agreement allowed Beretta to increase its stake in Ruger up to 25% while securing contractual board designation rights for the 2027 and 2028 annual meetings.
Regulators particularly scrutinized the arrangement's lack of robust independence safeguards for Beretta's board designees. Rather than eliminating Beretta's appointment rights entirely, the proposed five-year consent order allows the minority investment transaction to move forward under strict structural safeguards, interim compliance reporting, and ongoing notification mandates.