{"id":41967,"date":"2023-08-16T16:38:22","date_gmt":"2023-08-16T20:38:22","guid":{"rendered":"https:\/\/d56fg8tfg.fitnews.club\/finance\/ftc-acts-to-prevent-interlocking-directorate-arrangement-anticompetitive-information-exchange-in-eqt-quantum-energy-deal\/"},"modified":"2023-08-16T16:38:22","modified_gmt":"2023-08-16T20:38:22","slug":"ftc-acts-to-prevent-interlocking-directorate-arrangement-anticompetitive-information-exchange-in-eqt-quantum-energy-deal","status":"publish","type":"post","link":"https:\/\/d56fg8tfg.fitnews.club\/finance\/ftc-acts-to-prevent-interlocking-directorate-arrangement-anticompetitive-information-exchange-in-eqt-quantum-energy-deal\/","title":{"rendered":"FTC Acts to Prevent Interlocking Directorate Arrangement, Anticompetitive Information Exchange in EQT, Quantum Energy Deal"},"content":{"rendered":"
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The Federal Trade Commission today took action 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 by approving a consent order that prevents entanglements between the two companies and the exchange of confidential, competitively sensitive information. <\/span><\/span><\/p>\n

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 make Quantum one of EQT\u2019s largest shareholders and give Quantum \u2013 an active investor in natural gas production in the region \u2013 a seat on EQT\u2019s board of directors, violating the antitrust laws and harming competition in this industry. <\/span><\/span><\/p>\n

The FTC\u2019s consent order<\/a>\u00a0delivers ground-breaking structural relief that prohibits Quantum from occupying an EQT board seat, 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. This marks the FTC\u2019s first case in 40 years that enforces Section 8 of the Clayton Act, which prohibits interlocking directorates, an arrangement that occurs when an officer or director of one firm simultaneously serves as an officer or director of a competing firm. \u00a0<\/span><\/span><\/p>\n

\u201cAs originally structured, this deal would have resulted in an illegal interlocking directorate, facilitated the exchange of confidential and competitively sensitive information, and otherwise stifled competition in the Appalachian Basin,\u201d said Nathan Soderstrom, Acting Deputy Director of the FTC\u2019s Bureau of Competition.<\/span><\/span> \u201cThe Commission\u2019s order provides innovative and comprehensive relief to protect competition, as well as the millions of Americans who rely on Appalachian Basin natural gas to heat and power their homes.\u201d <\/span><\/span><\/p>\n

Under the proposed deal, EQT, the nation\u2019s largest natural gas producer, would acquire Quantum Energy\u2019s THQ Appalachia I, LLC, also known as Tug Hill, the eleventh largest Appalachian Basin natural gas producer. In addition, EQT would acquire Quantum Energy\u2019s THQ-XcL Holdings I, LLC, also known as XcL Midstream, which transports and processes Tug Hill\u2019s natural gas production. <\/span><\/span><\/p>\n

In return, Quantum would acquire up to 55 million shares of EQT stock and become one of EQT\u2019s largest shareholders. The proposed transaction also granted Quantum the right to an EQT board seat, to be held by Quantum\u2019s CEO or another Quantum designee. As the FTC\u2019s complaint states<\/a>, this arrangement creates an illegal interlocking directorate, which violates Section 8 of the Clayton Act. <\/span><\/span><\/p>\n

The FTC also alleges that, by making Quantum one of EQT\u2019s largest shareholders, the deal would give Quantum the ability to sway EQT\u2019s competitive decision-making and access EQT\u2019s confidential and competitively sensitive information. By enabling Quantum to communicate directly with EQT, access and exchange confidential business information, and influence or direct EQT\u2019s competitive actions or strategies, this arrangement would create an unfair method of competition in violation of the FTC Act, the FTC\u2019s complaint states. <\/span><\/span><\/p>\n

In addition to the proposed transaction, the FTC\u2019s complaint addresses a pre-existing joint venture between EQT and Quantum called The Mineral Company, which is involved in purchasing mineral rights in the Appalachian Basin. According to the FTC\u2019s complaint, this joint venture relationship raises additional concerns regarding anticompetitive information exchange and harms competition in the acquisition of mineral rights. <\/span><\/span><\/p>\n

The FTC\u2019s proposed consent order resolves the Commission\u2019s concerns while also clearly signaling the antitrust risks of excessive entanglements and anticompetitive information exchange. Additionally, the consent order sets important Commission precedent on the application of Section 8 of the Clayton Act, Section 5 of the FTC Act, and the use of structural remedies to address these theories of harm.<\/span><\/span><\/p>\n

Specifically, the consent order would resolve the Commission\u2019s competition concerns through provisions that:<\/span><\/span><\/p>\n