OVERLAPPING DIRECTORS CAN POSE RISK FOR TECH FIRMS

Boardroom

The recent departure of Alphabet Inc.'s chief legal officer from Uber Technologies Inc.’s board highlights how a little-noticed prohibition against interlocking directorates can cause problems for technology firms and private equity groups.

Enforcement of the Clayton Act Section 8 prohibition against interlocking directorates among competitors is infrequent. But the threat that private plaintiffs might use overlaps to support a Sherman Act conspiracy claim means companies must be careful, particularly as increasing tech market complexity and growing private equity investment increase the risk of unnoticed interlocks, antitrust practitioners said.

“When you have overlapping directors, it could support an inference that there was control and information sharing, and that is a real problem,” said Stuart Plunkett, a Baker Botts LLP partner in San Francisco.

Given the stakes, companies should regularly review their board composition as part of good corporate hygiene, practitioners told Bloomberg BNA.

Read more about the risks associated with interlocking directorates in this story.