Justice Brandeis condemnation was unequivocal (read quote at the end of page). Interlocking directors amounted to corporate conspiracy, this is a collusive practice that strengthens the cohesiveness among well-connected organizations.

Compared to cartels, trusts, Joint venture and licensing agreements, interlocking directors are highly influential, fluid, relatively invisible and hence less amenable to public scrutiny.

The pujo committee report which prompted Justice Brandeis commentary, resulted in legislation, specifically section 8 of the Clayton Act, which forbids an individual to be the director of two competitive organizations. The enforcement of the Clayton Act has been weak, as several studies have shown breaches of Clayton Act.

Here is a summary of findings (based on research work on this subject by Johannes M Pennings):

* Interlocking is highest in most concentrated industries (cream of the crop) i.e. those most nearly resembling a monopoly

* Financial corporations avoid interlocks with non-financial corporations that are saddled with debt, are capital intensive or non solvent. Exception, in some industries viz. energy, financial interlocks and capital intensity are highly correlated.

Introduction

Anti-Trust Laws

Interlocks & Law

True Stories

Phil

Webb Sullivan

Suggested Books

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