FTC Approves Final Order to Prevent Interlocking Directorate Arrangement, Anticompetitive Information Exchange in EQT, Quantum Energy Deal

Federal Trade Commission

The Federal Trade Commission recently finalized a consent order that prevents entanglements and the exchange of confidential, competitively sensitive information to resolve antitrust concerns surrounding a $5.2 billion cash-and-stock deal between private equity firm Quantum Energy Partners and natural gas producer EQT Corporation.

Quantum and EQT are direct competitors in the production and sale of natural gas in the Appalachian Basin, the largest natural gas-producing region in the United States. The proposed acquisition would have made Quantum one of EQT’s largest shareholders and given Quantum – an active investor in natural gas production in the region – a seat on EQT’s board of directors, which the FTC alleged would violate the antitrust laws and harm competition in this industry.

Under the FTC’s order, Quantum is prohibited from occupying an EQT board seat to prevent the formation of an interlocking directorate, which is an arrangement that occurs when an officer or director of one firm simultaneously serves as an officer or director of a competing firm. The final order also requires Quantum to divest its EQT shares, prevents anticompetitive information exchange, unwinds a separate anticompetitive joint venture between the two entities, and imposes additional restraints to protect competition.

The order also imposes other provisions designed to ensure the effectiveness of the consent order, including the appointment of a monitor to track compliance and a requirement that for the duration of the order, Quantum is prohibited from acquiring additional EQT shares absent prior Commission approval. This finalized consent decree resolves the FTC’s first case in 40 years that enforces Section 8 of the Clayton Act, which prohibits interlocking directorates.

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Following a public comment period, the Commission voted 3-0 to approve the final order.

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