Interlocking Directorate


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Interlocking Directorate

The relationship that exists between the board of directors of one corporation with that of another due to the fact that a number of members sit on both boards and, therefore, there is a substantial likelihood that neither corporation acts independently of the other.

Because the same persons occupy seats on the boards of companies that are supposed to compete in the marketplace, there is a potential for violations of federal antitrust acts, particularly the Clayton Act (15 U.S.C.A. §§ 12-27 [1914]) which prohibits the existence of inter-locking directorates that substantially reduce commercial competition.

References in periodicals archive ?
Indeed, an interlocking directorate situation, which exists today, may not at all be intended to restrict or lessen competition.
244-45 (1981) (arguing that the interlocking directorate can "aid
The subject of the study was interlocking directorates in Polish joint-stock companies.
One result of these features is the pervasiveness of interlocking directorates between corporations and the government in emerging economies.
The paper also reviews the six forms of interorganizational relationships most commonly pursued in practice and discussed in the litera ture, including joint ventures, networks, consortia, alliances, trade associations, and interlocking directorates.
The interlocking directorate is an organizational mechanism for the control and coordination of actions of firms in business groups, and it may be found in conjunction with any of the other solidarity mechanisms (Granovetter 1994: 464).
Given that ICAP and Tullett Prebon would continue to compete after the transaction, the department had serious concerns that ICAPs ability to nominate a Tullett Prebon board member would create an interlocking directorate in violation of Section 8 of the Clayton Act.
In the third section, we review the theory of interlocking directorates, as we believe that director interlocks will form an important mechanism for information sharing and the creation of community-level social capital among family business owners.
Social network techniques have long been used in research on the interlocking directorate, where the firm is the unit of analysis, but this technique may also be fruitfully applied to the study of relationships between individual directors within boards (see Palmer, 1988, for a discussion of the "dual nature" of corporate interlocks).
In discussing interlocking directorates, Brandeis argued that "the practice of interlocking directorates is the root of many evils.
The FTC also announced the revised dollar thresholds applicable to the size criteria applied under Section 8 of the Clayton Act, governing the legality of interlocking directorates.
Interlocking directorates, firm strategies and performance in Hong Kong: towards a research agenda.