SolarWinds, Dynatrace Directors Resign After DOJ Crackdown

The U.S. Department of Justice is pushing companies who normally compete with each other to stop sharing directors — with SolarWinds, Dynatrace and a handful of other firms taking action after the clampdown.

The DOJ Wednesday said that as a result of its move to enforce Section 8 of the Clayton Act, which is aimed at prohibiting interlocking directorates, seven directors from 10 companies have resigned.

According to the Federal Register, Section 8 of the Clayton Act “prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations if two thresholds are met. Competitor corporations are covered by Section 8 if each one has capital, surplus, and undivided profits aggregating more than $10,000,000, with the exception that no corporation is covered if the competitive sales of either corporation are less than $1,000,000.”

[Related: Kaseya Ransomware: 8 Things Learned From The DOJ, FBI]

The DOJ said it has been moving in the last few months to “reinvigorate” the enforcement of Section 8, which it says has been an important but underused part of the nation’s antitrust laws, said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division in a statement.ADVERTISEMENT

“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,” Kanter said. “The Antitrust Division is undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law.”

The DOJ said that 10 companies, representing five pairs of competitors, have “unwound the interlocks without admitting to liability,” leading to resignations of seven directors in total.

Among those who have taken action are SolarWinds and Dynatrace, both of which provide application performance monitoring software. The two companies shared one director from private equity investor Thoma Bravo who has resigned. Two other SolarWinds directors who also simultaneously served on Thoma Bravo’s board have also resigned from the SolarWinds board.

Online corporate education services providers Skillsoft and Udemy shared a director with investment firm Porsus. That director resigned from Udemy’s board.

Transportation-focused component manufacturers Littlefuse and CTS simultaneously shared a director who has since resigned from CTS’ board.

Space infrastructure and communications products and services providers Maxar Technologies and Redwire shared a director who has since resigned from Redwire’s board.

A director who simultaneously served on the boards of go-to-market information and intelligence platform providers Definitive Healthcare and ZoomInfo Technologies has resigned from Definitive’s board.

Eight of the 10 companies named in the DOJ’s Section 8 action responded to a CRN request for more information by press time.

Udemy, in a statement emailed to CRN, wrote, “Larry Illg stepped down from Udemy’s Board of Directors on September 23 as a result of concerns expressed by the DOJ. There was no finding that we violated any law, and we believe that we have resolved any concerns that the DOJ may have had regarding Larry sitting on both the Udemy and Skillsoft Board of Directors. Larry has been instrumental in helping to scale our business, expand our product offerings, raise significant capital and successfully complete our initial public offering last year. We thank him for his contributions and wish him well. Prosus remains one of our largest shareholders and we look forward to their continued support.”

SolarWinds, in a U.S. Securities and Exchange filing on Wednesday, said that Seth Boro, Michael Hoffmann, and James Lines on October 14 notified SolarWinds and its board of directors of their decisions to resign immediately from the board and its committees. All three were elected to the board as designees of affiliates of Thoma Bravo.

“Messrs. Boro, Lines and Hoffmann resigned following receipt of a letter from the US Department of Justice (the “DOJ”) alleging that their service on the Board violated Section 8 of the Clayton Antitrust Act. Thoma Bravo informed the Company that, without admitting any violation, Thoma Bravo and the resigning directors chose to resign rather than to contest the allegations. The resignations were not the result of any disagreement with the Company,” SolarWinds wrote.

The DOJ said there will be a broader review of potentially unlawful interlocking directorates going forward.LEARN MORE: Application Management 

 Learn About Joseph F. Kovar


Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at [email protected].


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