FTC Steps in to Take Action Regarding Ruger, Beretta Arrangement

I don’t like non-competitive tactics in business. I don’t want anything to do with businesses that align strategically to work together while potentially pushing other businesses out of the industry altogether.

But the thing I dislike even more is when the government decides it’s got to swoop in to save the day, especially when it’s the firearm industry.

Suffice it to say that I’m not a happy camper these days.

The Federal Trade Commission took action to resolve antitrust concerns arising from a stock purchase agreement between two of the largest firearm manufacturers, Beretta Holding S.A. (Beretta) and Sturm, Ruger & Co. Inc. (Ruger), by accepting a proposed consent order that prevents anticompetitive entanglements between the two companies.

Under the terms of the FTC’s proposed consent order, Beretta, a subsidiary of Upifra S.A., will be prohibited from appointing or nominating anyone to serve on Ruger’s board of directors unless that person is independent of Beretta.

The order settles allegations that Beretta and Ruger’s proposed stock purchase deal would create an illegal interlocking directorate arrangement in violation of Section 8 of the Clayton Act, which generally prohibits directors and officers from serving simultaneously on the boards of competitors.

The order marks the FTC’s latest enforcement action to crack down on companies sharing directors. Interlocking directorates can create opportunities for anticompetitive coordination between competitors, including through the sharing of competitively sensitive information.

“Competition thrives best when the temptation to collude and share sensitive information isn’t on the table,” said Taylor C. Hoogendoorn, Deputy Director of the FTC’s Bureau of Competition. “Competition between gunmakers helps ensure that Americans can exercise their Second Amendment rights. The FTC’s order aims to preserve the independence of a significant American gunmaker and removes the risk of anticompetitive coordination between two of the largest firearm manufacturers by taking decisive action to prevent anticompetitive interlocking directorates from forming. This latest enforcement action serves as a warning that the FTC will take action to prevent anticompetitive board of director overlaps between competitors.”

Under the letter of the law, this might well be illegal. However, there’s a difference between what’s wrong and what’s illegal. 

I’m not saying this deal is right, because it does look like Beretta would own 25 percent of Ruger and place two people as members of Ruger’s board of directors, and that suggests these two aren’t competitors anymore, but would create a quasi-company that, while separate legally, would be aligned.

The problem is that governmental solutions are often worse than the problems they tried to address.

Neither company is the grand titan of the firearm industry, and that wouldn’t change if they formally merged into one company. There are bigger outfits in existence, after all, so it’s not like any lack of competition between these two will actually amount to much with regard to the industry itself.

And a free market means you have to let companies have a little freedom. It’s kind of baked into the name, you know?

At the end of the day, we’ll have to see where this all leads. I think it’s mostly a nothing that’s being turned into something, but I wouldn’t mind seeing the two back off from this agreement voluntarily. If Beretta wants a say in Ruger’s operation, just buy them.

Editor’s Note: The radical Left will stop at nothing to enact their extreme gun control agenda and strip us of our Second Amendment rights.

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