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June 26, 2012

Seventh Circuit Rejects Shareholders' Derivative Suit Against Alleged Interlocking Directorate, But Antitrust Risks Remain

Arnold & Porter Advisory

On June 12, 2012, the Seventh Circuit brusquely rejected a shareholders' derivative action alleging a violation of the antitrust laws under Section 8 of the Clayton Act. Section 8 forbids - except under certain narrowly defined safe harbors - a person serving "as a director or officer in any two corporations...that are...competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws."1 Although private litigation under § 8 has been infrequent, this case - Robert F. Booth Trust v. Crowley - serves as an important reminder that board appointments may raise serious antitrust issues and that private plaintiffs can enforce § 8.

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