The Justice Department’s recent actions regarding Warner Bros. Discovery Inc. (WBD) and Charter Communications Inc. highlight the importance of complying with antitrust laws, particularly Section 8 of the Clayton Act. This section prohibits individuals or companies from serving on the boards of competing entities simultaneously, except under limited circumstances.
Section 8 of our antitrust laws is a crucial yet often overlooked provision. Congress classified interlocking directorates as a per se violation to prevent the concentration of power and the exchange of sensitive information among competitors. Such practices harm the economy and the American public. The Antitrust Division is conducting a comprehensive review of interlocking directorates across all sectors and is committed to enforcing the law.
Warner Bros Case
In this case, Steven Newhouse and Steven Miron, who were directors at WBD, resigned from the board after concerns were raised about their positions on both WBD and Charter Communications Inc. boards potentially violating Section 8.
Steven Newhouse, whose family business holds a significant stake in Warner Bros., and Steven Miron, associated with the Newhouse family business, were both members of WBD’s board committees. They chose to resign rather than contest the matter, citing the changing dynamics of competition in the entertainment industry. The Justice Department’s increased enforcement of Section 8 has led to resignations at several companies, including Nextdoor Holdings Inc. and Sun Country Airlines Holdings Inc.
Newhouse’s role as co-president of Advance, along with Miron’s position as CEO of Advance/Newhouse Partnership, underscores their significant influence in the media industry. Their resignations will reduce WBD’s board to 11 members, effective March 29. These developments highlight the ongoing efforts to ensure fair competition in the entertainment and telecommunications sectors, emphasizing the need for companies and individuals to adhere to antitrust regulations.
Previous Actions by the DOJ under the Clayton Act
Section 8 of the antitrust laws aims to prevent companies from coordinating with each other, either directly or indirectly, by having directors serve on the boards of competing companies. The Department of Justice (DOJ) has recently taken action against several companies where such interlocking directorates were identified:
- Definitive Healthcare Corp. and ZoomInfo Technologies Inc.: A director who served on the boards of both companies resigned from Definitive’s board.
- Maxar Technologies Inc. and Redwire Corp.: A director who served on the boards of both companies resigned from Redwire’s board.
- Littelfuse Inc. and CTS Corp.: A director who served on the boards of both companies resigned from CTS’s board.
- Skillsoft Corp. and Udemy Inc.: A director who served on the boards of both companies, representing the investment firm Prosus, resigned from Udemy’s board.
- Solarwinds Corp. and Dynatrace, Inc.: A director who served on the boards of both companies, representing the investment firm Thoma Bravo, resigned from Solarwinds’s board, along with two additional directors representing Thoma Bravo.
These actions were taken to address the DOJ’s concerns about potential violations of antitrust laws.
