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SolarWinds and Dynatrace directors resign over antitrust concerns
DoJ cracks down on competing companies that share board members
Directors at tech firms SolarWinds, DynaTrace, Skillsoft, and Udemy have resigned after the US Department of Justice raised concerns about overlapping board membership it felt created antitrust problems.
The DoJ on Wednesday announced the resignations and explained they were made after it contacted companies it felt may have violated Section 8 of the Clayton Act – a statute that prevents one person from serving as a director or officer of two competing corporations.
"Competitors sharing officers or directors further concentrates power and creates the opportunity to exchange competitively sensitive information and facilitate coordination – all to the detriment of the economy and the American public," said assistant attorney general Jonathan Kanter of the Justice Department's Antitrust Division, adding that the Division "is undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law."
The DoJ's concerns about Solarwinds and Dynatrace centered on the fact both participate in the Application Performance Monitoring market but "One director served simultaneously on the boards of both companies, as did the investment firm Thoma Bravo." Two additional directors also represented Thoma Bravo on the Solarwinds board.
A Solarwinds filing names Seth Boro, Michael Hoffmann and James Lines as the directors who resigned, effective October 14.
Skillsoft and Udemy had similar issues. Both provide online education services and the DoJ found one director, who worked for the investment firm Prosus, was on both companies' boards.
The Register could not find filings from Prosus, Thoma Bravo, or Dynatrace at the time of writing.
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Investment firms sometimes distinguish themselves with expertise in specific sectors, with their officers placed on boards to share experience and smarts. The DoJ's warning it intends to go hard on Section 8 suggests such firms will need to be more careful in their choice of directors for investee companies.
Other companies the DoJ tapped for interlocking board members were:
- Littelfuse Inc. and CTS Corp. – manufacturers of components and technologies for use in transportation applications, including sensors and switches for use in passenger and commercial vehicles;
- Maxar Technologies Inc. and Redwire Corp. – providers of space infrastructure and communications products and services;
- Definitive Healthcare Corp. and ZoomInfo Technologies Inc. – providers of market information and intelligence platforms used by third-party sales, marketing, and recruitment operations.
Each pair of the abovementioned companies shared a single director, who has resigned. ®