A PYMNTS Company

Interlocking Directorates in the European Union: An Argument for Their Restriction

By  |  December 2, 2015

Posted by Social Science Research Network

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    Interlocking Directorates in the European Union: An Argument for Their Restriction Vidir Petersen (University of Iceland)

    Abstract: The EU Commission has recently undertaken a review of the EU Merger Regulation. In this process it has published a White Paper that proposes to extend the Regulation to cover situations in which firms acquire minority shareholding in their competitors. However, the White Paper is silent about the closely related phenomenon of interlocking directorates (interlocks), which occurs when the same person sits on the board of two firms. This issue has never been directly addressed by the European Union, perhaps because the theory of interlocks is underdeveloped in Europe. This paper provides comprehensive antitrust arguments for why the EU should restrict certain interlocking activity. The main argument is that the EU should prohibit horizontal interlocks (interlocks between competing firms) per se, as they raise serious antitrust concerns. The paper further argues that non-horizontal interlocks should be monitored, and it addresses certain important policy questions that the EU might face when designing the regulatory framework.