FTC Tightens Section 8 Rules on Competitor Board Seats in Minority Investments

In late 2025, the firearms industry became the unlikely stage for a showdown over antitrust law and corporate governance. Beretta Holding, an Italian gun manufacturer, had quietly accumulated a 10 percent stake in Sturm, Ruger & Co., making itself Ruger's largest shareholder. The move was aggressive and deliberate. Beretta Holding then began pushing for changes in how Ruger operated, demanding a seat at the table—literally. By February 2026, the pressure intensified. Beretta Holding told Ruger it would keep buying shares unless the company agreed to let it own up to 25 percent of the business, gave it board representation, and granted it voting rights. Ruger pushed back, citing a legal obstacle: Section 8 of the Clayton Act, which bars interlocking directorates—arrangements where the same person sits on the boards of competing companies.

When Ruger refused to negotiate on those terms, Beretta Holding escalated. That same month, it launched a proxy fight, nominating four directors for election to Ruger's board. Ruger responded with a public filing accusing Beretta Holding of trying to seize control. The two companies were now locked in a visible dispute, each making its case to shareholders and regulators. By May 2026, both sides had tired of the fight. They reached a settlement. Beretta Holding would drop its proxy contest and director nominations. In exchange, Ruger would allow Beretta Holding to increase its ownership to 25 percent, accept a three-year standstill period during which Beretta Holding would generally vote with management, and permit Beretta Holding to nominate up to two directors—but only if those directors were truly independent of Beretta Holding. The two companies also agreed to explore collaborations in manufacturing, sourcing, and distribution.

The settlement looked like a compromise. It was not enough. In September 2026, just four months after the deal was struck, the Federal Trade Commission announced a consent order that found the arrangement violated antitrust law. The FTC's complaint identified two critical flaws in how the parties had structured the board nomination rights. First, the stock purchase agreement did not contain robust enough requirements to ensure that the directors nominated by Beretta Holding would actually be independent of Beretta Holding. The FTC's definition of independence is strict: a director cannot have any familial, personal, financial, contractual, professional, employment, or other relationship with the competitor that could reasonably be expected to impair their judgment. Second, and more damaging, the agreement allowed for waivers of these independence requirements. That meant Beretta Holding could potentially nominate someone who did not meet the independence standard—or even nominate one of its own executives—if the waiver was invoked.

The FTC's action signals a significant tightening of how antitrust law applies to minority investments. Section 8 of the Clayton Act has long been understood as a tool to prevent interlocking directorates in the context of mergers and acquisitions. But the Beretta-Ruger order makes clear that the law reaches further. A company does not need to own a majority stake or control a board to run afoul of Section 8. A minority investment paired with governance rights—the right to nominate directors, attend board meetings as an observer, or influence strategic decisions—can trigger antitrust liability if the investor is a competitor. The FTC's interpretation of what counts as competition is also broad. Even limited product overlap between two companies can be enough to trigger scrutiny.

For companies considering investments in or collaborations with competitors, the implications are substantial. Board nomination rights must now be structured with extraordinary care. Independence cannot be a suggestion or a guideline; it must be a binding requirement with no escape hatches. A nominee cannot have any material relationship with the investor that could cloud their judgment. The agreement must not permit the investor to waive these standards, and it must not allow the investor to place its own personnel on the board. The FTC's willingness to challenge the Beretta-Ruger arrangement also reveals that the agency is monitoring publicly available information—SEC filings, corporate disclosures, proxy statements—to identify potential violations. A company cannot rely on the assumption that a governance arrangement will escape notice simply because it is structured as a minority investment rather than a merger.

The broader message is that the FTC views board seats and governance rights as potential vectors for anticompetitive conduct. A competitor with a seat on your board could access sensitive business information, influence strategic decisions, or coordinate with you in ways that harm competition. The agency is determined to prevent these arrangements, even when they fall short of outright control. Companies that are now structuring minority investments or governance arrangements with competitors must assess Section 8 risk early and build independence safeguards into the legal documents themselves. The Beretta-Ruger order shows that good intentions and reasonable-sounding independence standards are not enough. The law now demands explicit, ironclad protections—and the FTC is watching to make sure they are real.