Analysis Group Consultants Summarize ABA Webinar on the Regulation of Interlocking Directorates
November 5, 2024
Analysis Group Vice President David Toniatti and Associate Lipeng Chen have coauthored a summary of the American Bar Association (ABA) webinar “Interlocking Directorates in the Crosshairs of Regulation” on the ABA’s Antitrust Law Section website. Vice President Lauren Hunt moderated the panel, which included Analysis Group affiliate Edward Rock (NYU School of Law), Kelly Fayne (Latham & Watkins), Brendan Ballou (author of Plunder: Private Equity’s Plan to Pillage America), and Albert Banal-Estanol (Universitat Pompeu Fabra). The authors summarize a conversation that focused on the concepts of common ownership and interlocking directorates and their historical context, recent regulatory changes, and practical implications for corporate governance.
Ms. Fayne opened the discussion by describing the differences between common ownership and interlocking directorates, with Mr. Ballou tracing potential concerns regarding the phenomena back to Louis Brandeis and the influence of his ideas on the Federal Trade Commission (FTC) Act of 1914, which includes the current statute prohibiting interlocking directorates. Professor Rock observed that, historically, systematic anticompetitive effects of these structures have been difficult to prove, which, in his view, has led to underenforcement of the FTC Act. Dr. Banal-Estanol then noted that common ownership is prevalent in many industries and is becoming increasingly standard in Europe. Mr. Ballou explored the role of private equity, highlighting that private equity firms’ reliance on debts and fees, insulation from liability, and short-term thinking may exacerbate anticompetitive risks. Ms. Fayne referenced procompetitive arguments, explaining that interlocking directorates and common ownership can leverage expertise and create opportunities for increased funding. The panel concluded with a discussion of the corporate governance implications of common ownership in which Ms. Fayne touched on the importance of integrating antitrust compliance with board management.