FR 2025-01513

The document titled "Revised Jurisdictional Thresholds for Section 8 of the Clayton Act" is a notice from the Federal Trade Commission (FTC) announcing the annual revision of financial thresholds related to interlocking directorates. These thresholds are set under Section 8 of the Clayton Act, a provision aimed at preventing individuals from holding director or officer positions in two competing corporations. The document specifies that these updates are necessary to reflect changes in the gross national product and are effective immediately.

Summary

This notice serves to inform the public and relevant stakeholders of the updates to financial thresholds that two corporations must meet for interlocking directorate restrictions to apply. As of January 22, 2025, the new threshold for larger corporations is $51,380,000, while for smaller corporations it is $5,138,000. These adjustments ensure that the regulations remain in line with economic changes.

Significant Issues and Concerns

One key issue is the lack of explanation in the document on how the new thresholds were calculated based on the change in the gross national product. This could leave readers questioning the basis and accuracy of these numbers. Additionally, the document uses complex terms such as "capital, surplus, and undivided profits," which might be difficult for individuals without specialized legal or financial knowledge to fully understand.

The absence of practical examples or scenarios in the document where the revised thresholds could apply may also limit its comprehensibility to the general public. Finally, it does not provide information on whether public comments were considered in revising these thresholds, potentially raising concerns about the transparency and inclusiveness of the revision process.

Broad Public Impact

For the general public, these updates might seem distant or irrelevant unless one works in or closely follows corporate governance. Nevertheless, such changes could influence the dynamics of corporate competition and board appointments, possibly affecting job markets and economic conditions indirectly.

Impact on Specific Stakeholders

For companies, these revised thresholds could mean that some will now fall under or out of the regulatory scope depending on their financial situation. Corporations meeting these thresholds must reassess their board compositions to ensure compliance, potentially leading to changes in governance practices. Company directors and officers must remain aware of these shifts to avoid inadvertently violating the law.

In conclusion, while the FTC's annual update aligns regulatory standards with economic changes, the lack of detailed explanation and context might hinder understanding and compliance. Providing more comprehensive insights could enhance transparency and foster a better-informed public and corporate sector.

The Federal Trade Commission (FTC) has released a notice concerning the revised thresholds for interlocking directorates, as required by the amendments made in 1990 to section 8 of the Clayton Act. This revision affects corporations that are structured in such a way that individuals might serve as directors or officers in multiple, potentially competing entities. These thresholds are important because they help determine when a person can legally hold such positions within different corporations.

Thresholds and Financial References

The document outlines specific financial thresholds that apply to this regulation. Particularly, it states that competitor corporations fall under the jurisdiction of section 8 if each corporate entity has combined assets of more than $10,000,000 in capital, surplus, and undivided profits. However, there is an exception if the competitive sales of either corporation amount to less than $1,000,000; in that case, section 8 would not apply.

The annual adjustment of these financial thresholds is based on changes in the gross national product. As a result of the latest adjustment, the new thresholds have been set at $51,380,000 for section 8(a)(1) and $5,138,000 for section 8(a)(2)(A). These updated figures became effective immediately upon the release of the notice.

Impact and Considerations

One issue raised is the lack of specific information on how these new thresholds are calculated. The document indicates adjustments are made based on the change in gross national product but does not elucidate the precise methodology. This can lead to confusion or concern among stakeholders about the underlying rationale for these substantial alterations in financial thresholds.

Another identified issue is the document's omission of contextual ramifications of these revised thresholds on businesses or corporations. Without detailed commentary, it's challenging for companies to assess how these numbers could affect their governance structures or compliance requirements quickly.

Additionally, the technical terms used, such as "capital, surplus, and undivided profits," might pose comprehension challenges for individuals unfamiliar with legal or financial jargon. The absence of examples or scenarios illustrating when these thresholds would apply further complicates understanding for stakeholders trying to determine the direct impact of these changes.

Overall, while the notice effectively outlines the new financial thresholds, the lack of detailed elaboration on these methodological and contextual aspects limits full comprehension of their implications for businesses and directors involved in interlocking directorates. This could benefit from more comprehensive outlines or a separate explanatory document aimed at providing clarity about these financial changes and their practical application.