Related Enforcement Issues

• Pages: 41-48

CHAPTER III

RELATED ENFORCEMENT ISSUES

Section 8 operates in concert with other antitrust laws and regulatory

regimes to address interlocking directorates. This chapter focuses on the

relationship between Section 8 and other antitrust laws and identifies

other statutory regimes that prohibit or regulate interlocking directorates.

A. Relationship to Section 1 of the Sherman Act

Section 8 of the Clayton Act is designed to prevent “incipient

violations of the antitrust laws by removing the opportunity or temptation

to such violations through interlocking directorates.”1Thus, rather than

confronting antitrust violations as they arise under the Sherman Act,

Section 8 is intended to be preventative.

A director interlock “may lead to trade restraints in violation of

Section 1 of the Sherman Act” by creating an avenue for illegal

agreements between competitors to arise.2A joint director is presumably

interested in increasing the profits of both companies on whose boards he

or she sits, and reducing competition between the companies may help

achieve this.3Even if no formal agreement to reduce competition results,

an interlock may increase the exchange of competitive information

between the competitors, which may lead to anticompetitive effects.

Section 8 avoids a potential route by which Sherman Act Section 1

violations might arise by eliminating one opportunity for illegal

coordination among competitors.

Certain interlocks are exempted from Section 8 where the

competition between the affected corporations is deemed de minimis.4

The statute exempts interlocks, even between competing companies, so

1. United States v. Sears, Roebuck & Co., 111 F. Supp. 614, 616 (S.D.N.Y.

1953).

2. Perpetual Fed. Sav. & Loan Ass’n, 90 F.T.C. 608, 622 (1977) (initial

decision). Sherman Act § 1, 15 U.S.C. § 1, declares illegal “[e]very

contract, combination . . . , or conspiracy, in restraint of trade or

commerce among the several States, or with foreign nations.”

3. Perpetual, 90 F.T.C. at 623.

4. 15 U.S.C. § 19(a)(2).