The Federal Trade Commission has accepted a proposed consent order that blocks Beretta from putting non-independent people on Ruger's board, resolving antitrust concerns over Beretta's plan to raise its investment in the gunmaker to as much as 25% of Ruger's outstanding shares. The order settles allegations that the arrangement would create an illegal interlocking directorate under Section 8 of the Clayton Act. The commission voted 2-0 to issue an administrative complaint and accept the consent agreement.
Beretta, a subsidiary of Upifra S.A., would have been able to appoint two Ruger board members under the deal, according to the FTC. The order bars Beretta from naming anyone who is not independent to those seats. It also bars Beretta from hiring those independent directors or entering financial relationships with them that would breach their fiduciary duty or pass nonpublic Ruger information to Beretta. Those restrictions stay in place until an independent director leaves the Ruger board and for one year after that.
Beretta must give the FTC written notice at least 15 days before any board appointments. The public has 30 days to comment on the proposed consent agreement package, and comments will be posted on Regulations.gov once they are processed. The FTC says the order resolves its competition concerns.
The agency describes the order as its latest enforcement action against shared directors. According to the FTC, interlocking directorates can enable anticompetitive coordination and can involve the sharing of competitively sensitive information. An administrative complaint is issued when the agency has reason to believe the law has been violated, and a final consent order carries the force of law for future actions.
Taylor C. Hoogendoorn, Deputy Director of the FTC's Bureau of Competition, said, "This latest enforcement action serves as a warning that the FTC will take action to prevent anticompetitive board of director overlaps between competitors."
The announcement does not disclose a price or dollar value for the stock purchase, a closing date or timeline for the deal, or an effective date for the consent order. The FTC's action follows its September 8 announcement of a case against payment processor Humboldt Merchant Services, which would pay $12 million under a proposed order and be permanently banned from processing payments for high-fraud-risk merchants. The agency alleged Humboldt processed payments for more than 1,000 shell merchants. On September 9, the FTC withdrew a 2021 policy statement it described as obsolete.
