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INTERLOCKING DIRECTORATE

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Definition:
An interlocking directorate occurs when the same person sits on the board of directors of two or more companies. There is a danger that an interlock between competing firms (direct interlocks) may be used to co-ordinate behaviour and reduce inter-firm rivalry.

Direct interlocks are illegal in the U.S. under the Clayton Act, but other countries are more lenient. Empirical evidence suggests, however, that the majority of interlocking directorates are between financial and non-financial companies. Thus, representatives of banks commonly sit on the boards of competing firms. These indirect interlocks are typically not a factor in competition policy.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.

Hyperlink:
http://www.oecd.org/dataoecd/8/61/2376087.pdf

Statistical Theme: Financial statistics

Created on Thursday, January 03, 2002

Last updated on Thursday, March 06, 2003