15 U.S.C. § 19 — Interlocking directorates and officers

Page 34 TITLE 15—COMMERCE AND TRADE § 19 (b) Accounting for foreign government subsidies A person required to file a notification under section 18a of this title that received a subsidy from a foreign entity of concern shall include in such notification content regarding such sub- sidy. (c) Authority of antitrust regulators The Federal Trade Commission, with the con- currence of the Assistant Attorney General in charge of the Antitrust Division of the Depart- ment of Justice, and in consultation with the Chairperson of the Committee on Foreign In- vestment in the United States, the Secretary of Commerce, the Chair of the United States Inter- national Trade Commission, the United States Trade Representative, and the heads of other ap- propriate agencies, and by rule in accordance with section 553 of title 5, shall require that the notification required under subsection (b) be in such form and contain such documentary mate- rial and information relevant to a proposed ac- quisition as is necessary and appropriate to en- able the Federal Trade Commission and the As- sistant Attorney General in charge of the Anti- trust Division of the Department of Justice to determine whether such acquisition may, if con- summated, violate the antitrust laws. (d) Effective date Subsection (b) shall take effect on the date on which the rule described in subsection (c) takes effect. (Pub. L. 117–328, div. GG, title II, § 202, Dec. 29, 2022, 136 Stat. 5970.) Statutory Notes and Related Subsidiaries FINDINGS AND PURPOSE Pub. L. 117–328, div. GG, title II, § 201, Dec. 29, 2022, 136 Stat. 5969, provided that: ‘‘(a) FINDINGS.—Congress finds the following: ‘‘(1) Foreign subsidies, which can take the form of direct subsidies, grants, loans (including below-mar- ket loans), loan guarantees, tax concessions, pref- erential government procurement policies, or govern- ment ownership or control, can distort the competi- tive process by enabling the subsidized firm to submit a bid higher than other firms in the market, or other- wise change the incentives of the firm in ways that undermine competition following an acquisition. ‘‘(2) Foreign subsidies are particularly problematic when granted by countries or entities that constitute a strategic or economic threat to United States inter- ests. ‘‘(3) The Made in China 2025 plan, states that the Chinese Communist Party will ‘support enterprises to carry out mergers and acquisitions (M&A), equity in- vestment, and venture capital overseas’. ‘‘(4) The 2020 report to Congress from the bipartisan U.S.-China Economic and Security Review Commis- sion concluded that the Chinese Government sub- sidizes companies with a goal of their expanding into the United States and other countries, finding that ‘[t]his process assists Chinese national champions in surpassing and supplanting global market leaders’. The report warns that the risk is particularly acute when it comes to emerging technologies, where China seeks to ‘surpass and displace the United States alto- gether [and that] [f]ailure to appreciate the gravity of this challenge and defend U.S. competitiveness would be dire . . . [and] risks setting back U.S. eco- nomic and technological progress for decades’. ‘‘(5) In remarks before the Hudson Institute on De- cember 8, 2020, FTC Commissioner Noah Phillips stat- ed, ‘[O]ne area where antitrust needs to reckon with the strategic interests of other nations is when we scrutinize mergers or conduct involving state-owned entities . . . companies that are controlled, to vary- ing degrees, by the state . . . [and] often are a gov- ernment tool for implementing industrial policies or to protect national security’. ‘‘(b) PURPOSE.—The purpose of this section [probably means ‘‘this title’’, enacting this section and this note] is to require parties providing pre-merger notifications to include in the notification required under section 7A of the Clayton Act (15 U.S.C. 18a) information con- cerning subsidies they receive from countries or enti- ties that are strategic or economic threats to the United States.’’ § 19. Interlocking directorates and officers (a)(1) No person shall, at the same time, serve as a director or officer in any two corporations (other than banks, banking associations, and trust companies) that are— (A) engaged in whole or in part in commerce; and (B) by virtue of their business and location of operation, competitors, so that the elimi- nation of competition by agreement between them would constitute a violation of any of the antitrust laws; if each of the corporations has capital, surplus, and undivided profits aggregating more than $10,000,000 as adjusted pursuant to paragraph (5) of this subsection. (2) Notwithstanding the provisions of para- graph (1), simultaneous service as a director or officer in any two corporations shall not be pro- hibited by this section if— (A) the competitive sales of either corpora- tion are less than $1,000,000, as adjusted pursu- ant to paragraph (5) of this subsection; (B) the competitive sales of either corpora- tion are less than 2 per centum of that cor- poration’s total sales; or (C) the competitive sales of each corporation are less than 4 per centum of that corpora- tion’s total sales. For purposes of this paragraph, ‘‘competitive sales’’ means the gross revenues for all products and services sold by one corporation in competi- tion with the other, determined on the basis of annual gross revenues for such products and services in that corporation’s last completed fis- cal year. For the purposes of this paragraph, ‘‘total sales’’ means the gross revenues for all products and services sold by one corporation over that corporation’s last completed fiscal year. (3) The eligibility of a director or officer under the provisions of paragraph (1) shall be deter- mined by the capital, surplus and undivided profits, exclusive of dividends declared but not paid to stockholders, of each corporation at the end of that corporation’s last completed fiscal year. (4) For purposes of this section, the term ‘‘offi- cer’’ means an officer elected or chosen by the Board of Directors. (5) For each fiscal year commencing after Sep- tember 30, 1990, the $10,000,000 and $1,000,000 thresholds in this subsection shall be increased (or decreased) as of October 1 each year by an amount equal to the percentage increase (or de- Page 35 TITLE 15—COMMERCE AND TRADE § 21 crease) in the gross national product, as deter- mined by the Department of Commerce or its successor, for the year then ended over the level so established for the year ending September 30, 1989. As soon as practicable, but not later than January 31 of each year, the Federal Trade Com- mission shall publish the adjusted amounts re- quired by this paragraph. (b) When any person elected or chosen as a di- rector or officer of any corporation subject to the provisions hereof is eligible at the time of his election or selection to act for such corpora- tion in such capacity, his eligibility to act in such capacity shall not be affected by any of the provisions hereof by reason of any change in the capital, surplus and undivided profits, or affairs of such corporation from whatever cause, until the expiration of one year from the date on which the event causing ineligibility occurred. (Oct. 15, 1914, ch. 323, § 8, 38 Stat. 732; May 15, 1916, ch. 120, 39 Stat. 121; May 26, 1920, ch. 206, 41 Stat. 626; Mar. 9, 1928, ch. 165, 45 Stat. 253; Mar. 2, 1929, ch. 581, 45 Stat. 1536; Aug. 23, 1935, ch. 614, § 329, 49 Stat. 717; Pub. L. 101–588, § 2, Nov. 16, 1990, 104 Stat. 2879; Pub. L. 103–203, § 1, Dec. 17, 1993, 107 Stat. 2368.) Editorial Notes REFERENCES IN TEXT The antitrust laws, referred to in subsec. (a)(1)(B), are defined in section 12 of this title. AMENDMENTS 1993—Subsec. (a)(5). Pub. L. 103–203 substituted ‘‘Jan- uary 31’’ for ‘‘October 30’’. 1990—Pub. L. 101–588 amended section generally, com- pletely revising it in form by substituting text divided into a subsec. (a) consisting of five numbered para- graphs and a subsec. (b) consisting of a single unnum- bered paragraph for former provisions which had con- sisted of a series of five undesignated paragraphs, and in substance by increasing the jurisdictional threshold for application of the section to corporations from $1,000,000 in net worth to $10,000,000 in net worth, cre- ating three ‘‘de minimis’’ exceptions to applications of the section in cases of insignificant competitive over- laps, and expanding the section to cover officers elected or chosen by the Board of Directors. 1935—Act Aug. 23, 1935, amended section generally. 1929—Act Mar. 2, 1929, amended second par. 1928—Act Mar. 9, 1928, amended second par. § 19a. Repealed. Aug. 23, 1935, ch. 614, § 329, 49 Stat. 717 Section, act Oct. 15, 1914, ch. 323, § 8a, as added June 16, 1933, ch. 89, § 33, 48 Stat. 194, related to interlocking corporations or partnerships making loans on securi- ties. § 20. Repealed. Pub. L. 101–588, § 3, Nov. 16, 1990, 104 Stat. 2880 Section, act Oct. 15, 1914, ch. 323, § 10, 38 Stat. 734, re- lated to a $50,000 yearly, aggregate limitation on pur- chases and contracts between a common carrier and any entity with whom such carrier has any form of interlocking directorate, etc., required filing with ICC of a full statement of transactions excluded from such limitation, and set forth fines and penalties for viola- tion of such limitation. § 21. Enforcement provisions (a) Commission, Board, or Secretary authorized to enforce compliance Authority to enforce compliance with sections 13, 14, 18, and 19 of this title by the persons re- spectively subject thereto is vested in the Sur- face Transportation Board where applicable to common carriers subject to jurisdiction under subtitle IV of title 49; in the Federal Commu- nications Commission where applicable to com- mon carriers engaged in wire or radio commu- nication or radio transmission of energy; in the Secretary of Transportation where applicable to air carriers and foreign air carriers subject to part A of subtitle VII of title 49; in the Board of Governors of the Federal Reserve System where applicable to banks, banking associations, and trust companies; and in the Federal Trade Com- mission where applicable to all other character of commerce to be exercised as follows: (b) Issuance of complaints for violations; hear- ing; intervention; filing of testimony; report; cease and desist orders; reopening and alter- ation of reports or orders Whenever the Commission, Board, or Sec- retary vested with jurisdiction thereof shall have reason to believe that any person is vio- lating or has violated any of the provisions of sections 13, 14, 18, and 19 of this title, it shall issue and serve upon such person and the Attor- ney General a complaint stating its charges in that respect, and containing a notice of a hear- ing upon a day and at a place therein fixed at least thirty days after the service of said com- plaint. The person so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered by the Commission, Board, or Secretary requiring such person to cease and desist from the violation of the law so charged in said com- plaint. The Attorney General shall have the right to intervene and appear in said proceeding and any person may make application, and upon good cause shown may be allowed by the Com- mission, Board, or Secretary, to intervene and appear in said proceeding by counsel or in per- son. The testimony in any such proceeding shall be reduced to writing and filed in the office of the Commission, Board, or Secretary. If upon such hearing the Commission, Board, or Sec- retary, as the case may be, shall be of the opin- ion that any of the provisions of said sections have been or are being violated, it shall make a report in writing, in which it shall state its find- ings as to the facts, and shall issue and cause to be served on such person an order requiring such person to cease and desist from such violations, and divest itself of the stock, or other share cap- ital, or assets, held or rid itself of the directors chosen contrary to the provisions of sections 18 and 19 of this title, if any there be, in the man- ner and within the time fixed by said order. Until the expiration of the time allowed for fil- ing a petition for review, if no such petition has been duly filed within such time, or, if a petition for review has been filed within such time then until the record in the proceeding has been filed in a court of appeals of the United States, as hereinafter provided, the Commission, Board, or