The Department of Justice announced on Monday, June 21, that two executives of Endeavor – CEO and Director Ariel Emanuel, and President Mark Shapiro – have resigned their positions on the Live Nation Entertainment board of directors after the Department expressed concerns that their positions on the Live Nation Board created an illegal interlocking directorate. An interlocking directorate is where one person – or an agent of one person or company – serves as an officer or director of two companies. Section 8 of the Clayton Act prohibits the same person or company from serving as an officer or director of two competing companies, except under certain defined safe harbors.
Endeavor and Live Nation compete closely in many sports and entertainment markets. Both Live Nation and Endeavor, through its wholly owned and minority owned subsidiaries, promote and sell tickets and VIP packages that include tickets, lodging, and travel accommodations, to live music, sporting, and other entertainment events. Based on US revenues, the interlock did not qualify for any of the Section 8 safe harbors.
“These resignations ensure that Endeavor and Live Nation will compete independently,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “Executives are not permitted to hold board positions on companies that compete with each other. The division will enforce the antitrust laws to make sure that all companies compete on the merits.”
Section 8 imposes bright line prohibitions designed to prevent harm from competitors having overlapping directors or managers, regardless of whether any anticompetitive conduct actually occurs. Interlocking directorates can restrict competition by providing a conduit for the exchange of competitively sensitive information and by facilitating coordination between competing companies. By eliminating the opportunity to coordinate – explicitly or implicitly – through interlocking directorates, Section 8 prevents violations of the antitrust laws before they occur.
