Empirical Research

“The practice of interlocking directorates is the root of many evils. It offends laws human and divine.” — Justice Louis Brandeis.[footnote]Louis D. Brandeis, Interlocking Directorates, in Other People’s Money and How the Bankers Use It 51, 51 (1914).[/footnote] Introduction Antitrust law prohibits competing corporations from sharing board members (so-called “interlocking directorates”) and has for more than a century.[footnote]Clayton Antitrust Act of 1914, ch. 323, § 8, 38 Stat. 730, 732–33 (codified as amended at 15 U.S.C. § 19 (2018)).[/footnote] The main idea is that if the same person serves on the boards of two competing companies, they may discourage one of their companies from competing vigorously against the other, and the information and connections they have make it easier for those companies to collude.[footnote]See Julian O. von Kalinowski, Peter Sullivan & Maureen McGuirl, 2 Antitrust Laws and Trade Regulation § 35.02[1] (2d ed. 2024) (noting the primary rationale for prohibiting interlocking directorates was that Congress viewed them as stifling competition; additional rationales included eliminating potential conflicts of interest among directors and creating business opportunities for individuals).[/footnote] So we prohibit people from serving on the boards of companies that compete even in part.[footnote]See 15 U.S.C. § 19(a) (“No person shall, at the same time, serve as a director or officer in any two corporations . . . that are . . . engaged in whole or in part in commerce; and . . . competitors . . . .”).[/footnote] It’s a simple rule—one that is easy to observe—and violating it is one of the few things antitrust declares illegal per se, with no opportunity to explain or justify the interlock.[footnote]See United States v. Sears, Roebuck & Co., 111 F. Supp. 614, 616–17, 621 (S.D.N.Y. 1953) (holding no anticompetitive effect need be shown to establish section 8 liability under the Clayton Antitrust Act).[/footnote]

We show that large numbers of companies are directly violating that law and that the problem goes well beyond simply breaking the law. Using a dataset that enables us to provide the first analysis of board members on both public and private companies—rather than just public companies[footnote]Prior work necessarily focused only on publicly traded companies due to data limitations. See Anoop Manjunath, Nathan Kahrobai, Mark A. Lemley & Ishan Kumar, Illegal Interlocks Among Life Science Company Boards of Directors, J.L. & Biosciences, Jan.–June 2024, at 1, 9 [hereinafter Manjunath et al., Illegal Interlocks] (acknowledging the dataset limitation to publicly traded companies); Yaron Nili, Horizontal Directors, 114 Nw. U. L. Rev. 1179, 1208 (2020) (same).[/footnote]—we find 2,309 instances of individuals sitting on the boards of two companies that are direct competitors. The extent of interlocks is so great that for those companies for which we have data on at least five board members, 8.1% had an individual interlock.

Showing that director interlocks occur in private and smaller companies is important because private companies account for 99% of all businesses[footnote]Hal Weitzman, Is the US Economy ‘Going Dark’?, Chi. Booth Rev., Summer 2023, at 26, 28.[/footnote] and 87% of all businesses earning more than $100 million annually.[footnote]Torsten Sløk, Many More Private Firms in the US, Apollo Acad.: Daily Spark (Apr. 20, 2024), https://www.apolloacademy.com/many-more-private-firms-in-the-us/ [https://perma.cc/VRE2-KZGR].[/footnote] Our broad view of the economy reveals that overlapping directorates are particularly common in the innovation-rich information technology (IT) and life sciences industries.[footnote]One study examining solely biotech had, however, found that biotech companies had high levels of interlocking boards, but without empirically comparing those figures to other industries. See Manjunath et al., Illegal Interlocks, supra note 6, at 4 (finding that “between 10 and 20% of biotech companies have interlocked directorates”); infra Part I (discussing limitations on prior studies).[/footnote] In pharmaceutical and biotech companies, for instance, among those for which we have the best board data, 18.2% have at least one board director who also sits on the board of another firm that is identified as a direct competitor.[footnote]See infra Appendix A.[/footnote] Among IT software companies, 10.5% had an interlocking board member.[footnote]See infra Appendix A.[/footnote] This view of private companies underscores the high stakes of interlocking boards for innovation and the economy.

Besides showing that board interlocks are more widespread than public-company data would indicate, we contribute new evidence indicating several reasons why the problem of interlocking boards is more concerning than previously realized. First, we provide the first data about who these directors are in their day jobs outside of their occasional board meetings. About 65% of the individual interlocking directors we identified are leaders of private equity, venture capital, and other investment funds that invest in the very companies on whose boards these directors sit. Companies in anticompetitive industries earn greater profits and thus provide greater returns for investors. Partners of investment firms receive a share of investment profits.[footnote]See infra Part III (noting that interlocking directors are partners at investment funds who personally share in those funds’ profits, creating direct financial incentives to favor anticompetitive outcomes).[/footnote] Consequently, many interlocking board members are controlled by investors with strong financial incentives to promote anticompetitive conduct in the industry, so the directors have strong personal financial incentives to promote anticompetitive conduct. We are thus the first to show that many individual interlocking directors form part of an investment-industrial complex that did not exist when lawmakers made such interlocks illegal and that provides additional incentives for anticompetitive conduct.

Second, one of the great challenges in antitrust law is defining the market in a way that shows two firms are competitors rather than merely participating in the same industry.[footnote]See Thomas B. Nachbar, Qualitative Market Definition, 109 Va. L. Rev. 373, 374 (2023) (“Few aspects of antitrust are more central, and more controversial, than the role of market definition.”).[/footnote] Although prior studies of interlocking boards in public companies have begun to construct more careful classification systems for markets, they all rely on proxies for competition.[footnote]Prior studies mostly rely on measures widely criticized by scholars as too broad to reliably reflect competition. Compare, e.g., Nili, supra note 6, at 1209 (relying on Standard Industrial Classification (SIC) codes), with Gerard Hoberg & Gordon Phillips, Text-Based Network Industries and Endogenous Product Differentiation, 124 J. Pol. Econ. 1423, 1427 (2016) (summarizing the limits of SIC code classifications). Some studies have improved upon the SIC codes used by Nili, but themselves face limits. See Manjunath et al., Illegal Interlocks, supra note 6, at 4, 9–10 (discussing their biotechnology-specific methodology and noting its limits); infra Part I.[/footnote] Our data, by contrast, relies on classifications used by investment funds themselves to identify competitors.[footnote]See infra Part II (explaining the dataset used).[/footnote] Thus, by providing a view of market definitions as industry itself defines competition, our Article adds weight to the conclusion that interlocking directors are indeed sitting on the boards of competitors.

Finally, the problem of interlocking boards extends well beyond individual directors serving on competitors’ boards. We show that the practice of investors having two or more employees serving on competitors’ boards is widespread throughout the economy.[footnote]It is known that venture capitals appoint directors on the boards of startups in which they invest and that sometimes those appointments are for companies in the same industry. See Ofer Eldar & Jillian Grennan, Common Venture Capital Investors and Startup Growth, 37 Rev. Fin. Stud. 549, 550–52, 570–76 (2023) (finding that venture capital directors who sit on the board of startups sit on the boards of multiple startups in the same industry). But Eldar and Grennan do not provide evidence that the directors sit on competitors’ boards. Nor do they indicate how widespread such practices might be across the economy, as they only looked at venture capital startups.[/footnote] This practice is even more common than individual interlocks, reaching 2,927 different companies and 9.9% of the companies with at least five board members in our dataset.[footnote]Infra Tables 2, 10.[/footnote] Again, most of these board members are senior-level employees sharing in the investor’s profits, who therefore have the opportunity and motivation to collude.[footnote]Infra section III.B.[/footnote] Once combined, individual and investor-level interlocks reach 13.4% of all companies—including 30.1% of pharmaceuticals and biotechnology companies and 16.9% of all IT and software companies.[footnote]Infra Table 4 and Appendix A.[/footnote]

Beyond these direct empirical contributions, we also bring into the legal literature a synthesis of important, recent research from other fields. The totality of our data and that other research suggests that interlocks raise significant anticompetitive concerns. Common directors offer boards expertise and other value that must be considered in determining the net impact of interlocking boards on society.[footnote]Infra section III.A.2.[/footnote] But there is evidence that interlocking boards lead to higher prices, fewer new product offerings, and—in the case of investor-level interlocks, at least—companies staying away from competitors’ markets.[footnote]Infra Part III.[/footnote] It is illegal under antitrust law to collude on prices or divide the economy into territories to avoid competition.[footnote]Infra notes 173, 202 and accompanying text.[/footnote] Yet interlocks may provide a widespread mechanism to push their firms away from pursuing competing research agendas or to coordinate the raising of higher prices. Even if there is no collusion, the overlap between board members may dampen incentives to compete vigorously.

Given these stakes, it is remarkable that the rule against interlocking directorates has received little attention from antitrust scholars or (until very recently, and only mildly) from antitrust enforcers. Most cases brought against interlocking directorates are decades old,[footnote]See infra Part I.[/footnote] though there has been a resurgence[footnote]See infra notes 72–78 and accompanying text.[/footnote] in the wake of a smaller empirical study one of us coauthored showing the extent of the problem.[footnote]Manjunath et al., Illegal Interlocks, supra note 6, at 1.[/footnote] We were unable to find a single major law review article written in recent years focusing on the antitrust implications of interlocking directors.[footnote]Only one recent law review article addresses the issue in a sustained manner, but it was more focused on corporate rather than antitrust law. See Nili, supra note 6, at 1186–87, 1239–48 (“[This] Article presents a set of potential reforms to address both antitrust and corporate governance concerns, calling for better corporate disclosure, the revision of director independence requirements, and regulatory and legislative reforms.”). We don’t mean to dismiss Nili’s important contribution, which gave us valuable new data. But most of the citations to Nili’s article are from corporate law articles. More to the point, none of the articles citing to Nili’s article focus on the antitrust implications of interlocking directors. We discuss Nili’s article in depth below. See infranotes 94–103 and accompanying text.[/footnote]

That inattention is particularly noteworthy because antitrust scholars have in recent years devoted volumes to a different corporate governance issue: common ownership.[footnote] Cf. Konstantinos Charistos & Konstantinos G. Papadopoulos, Cartel Reporting Under Passive Common Ownership, Econ. Letters, July 2022, at 1, 1 (arguing that common ownership reduces the incentive to blow the whistle and take advantage of antitrust leniency programs, an argument which should be stronger with common directorship). See generally Einer Elhauge, The Causal Mechanisms of Horizontal Shareholding, 82 Ohio St. L.J. 1 (2021) [hereinafter Elhauge, Causal Mechanisms] (explaining different channels through which horizontal shareholding can harm competition and urging solutions in antitrust law); Einer Elhauge, Horizontal Shareholding, 129 Harv. L. Rev. 1267 (2016) [hereinafter Elhauge, Horizontal Shareholding] (defining “horizontal shareholding” and arguing that common ownership in concentrated industries raises prices); C. Scott Hemphill & Marcel Kahan, The Strategies of Anticompetitive Common Ownership, 129 Yale L.J. 1392 (2020) (developing a typology for how common ownership can harm competition); Thomas A. Lambert, Mere Common Ownership and the Antitrust Laws, 61 B.C. L. Rev. 2913 (2020) (arguing that mere common ownership should not be condemned under section 1 of the Sherman Act or section 7 of the Clayton Act).[/footnote] Common ownership refers to the same institutions, such as BlackRock and Vanguard, owning shares in competitors. A vibrant body of antitrust scholarship has debated whether antitrust should respond to the precipitous increase in partial common ownership in light of empirical evidence suggesting that such ownership is linked to reduced competition.[footnote]See Elhauge, Horizontal Shareholding, supra note 27, at 1273–78 (showing that shareholder cross-ownership is associated with reduced competition); Hemphill & Kahan, supra note 27, at 1399–402 (same).[/footnote]

To be clear, we see the common ownership literature as valuable.[footnote]Indeed, we believe that interlocking boards have a potentially meaningful connection to common ownership. See infra section III.A.1.[/footnote] But overlapping share ownership is not itself illegal. Nor have scholars established a clear mechanism by which those common institutional owners harm competition.[footnote]See Elhauge, Causal Mechanisms, supra note 27, at 34 (summarizing Hemphill and Kahan’s argument that the effects of causal mechanisms either lack empirical testing, or if tested, are implausible). One partial mechanism is that ownership can drive cartel participation. See Vincent Abraham, Florian Ederer & Catarina Marvão, Common Ownership and Collusion 2–4 (July 17, 2025) (unpublished manuscript), https://ssrn.com/abstract=5290001 [https://perma.cc/4CD2-XKLQ] (investigating the relationship between overlapping ownership and cartel participation).[/footnote] After all, financial institutions like BlackRock and Vanguard do not actively manage the companies they own shares in.[footnote]See, e.g., Dorothy S. Lund, The Case Against Passive Shareholder Voting, 43 J. Corp. L. 493, 495 (2018) (explaining that index funds lack financial incentives to participate in corporate governance because “passive funds tend to have very large portfolios, and therefore, an investment in improving governance at a single firm is especially unlikely to enhance the fund’s overall performance”). [/footnote] Instead, they tend to passively hold shares of most publicly traded companies. So it is heavily contested whether and how broad-based ownership might be undermining competition.[footnote]See Jonathan B. Baker, Overlapping Financial Investor Ownership, Market Power, and Antitrust Enforcement: My Qualified Agreement With Professor Elhauge, 129 Harv. L. Rev. Forum 212, 223–32 (2016), https://harvardlawreview.org/wp-content/uploads/2016/03/vol129_ Baker-2.pdf [https://perma.cc/98Y7-T47F] (cautioning that current antitrust doctrine may not suffice to combat common ownership concerns); Patrick Dennis, Kristopher Gerardi & Carola Schenone, Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry, 77 J. Fin. 2765, 2768 (2022) (reexamining airline data and finding that prior common ownership and price correlation may be explained by measurement choices and market share); George S. Dallas, Common Ownership: Do Institutional Investors Really Promote Anti-Competitive Behavior?, Harv. L. Sch. F. on Corp. Governance (Dec. 2, 2018), https://corpgov.law.harvard.edu/2018/ 12/02/common-ownership-do-institutional-investors-really-promote-anti-competitive-behavior/ [https://perma.cc/89X9-8NFK] (arguing that evidence of the anticompetitive effects of common ownership is inconclusive and the harms of combatting common ownership outweigh the potential benefits).[/footnote]

In contrast, interlocking directors are more concretely problematic as a matter of influence and law. Unlike passive shareholders, the very purpose of board members is to actively participate in the governance of firms. Moreover, we show that these interlocking board members are often employed by an investor that does not simply passively hold shares but is instead a private equity or venture capital firm, groups known to aggressively intervene as investors. Most famously, private equity companies regularly take over and shut down or pare down companies .[footnote]See, e.g., Robert Thorpe, List of Stores Closing After Being Taken Over by Private Equity, Newsweek (Feb. 28, 2025), https://www.newsweek.com/stores-closing-after-being-taken-over-private-equity-firms-2037523 [https://perma.cc/L679-K6YZ] (last updated Mar. 3, 2025) (documenting that 7,325 retail stores shut down after being acquired by private equity firms).[/footnote] And while evidence of anticompetitive harm would be needed to convict common owners for violating the law,[footnote]See Elhauge, Horizontal Shareholding, supra note 27, at 1308 (noting that courts require proof of actual anticompetitive effects before liability attaches to passive common ownership).[/footnote] the mere existence of common directors at competing firms is already per se illegal, meaning no such evidence of harm is required.[footnote]See infra note 59 and accompanying text.[/footnote] And while investor-level board interlocks are of questionable legality,[footnote]See infra notes 64–71 and accompanying text.[/footnote] they present similar mechanisms for collusion or other reductions in competition.

Thus, scholars have devoted volumes of research to a corporate governance practice whose mechanism for anticompetitive behavior and illegality are uncertain. But they have yet to turn their sustained attention to interlocking directors despite a tangible mechanism for anticompetitive behavior and an undisputed status of illegality. We seek to change that.

Our findings have important policy implications. One is obvious: Both companies and enforcers need to pay attention to and enforce the law. Now that the evidence exists to conclude that board interlocks may have significantly anticompetitive implications, there should be greater motivation to apply the law on the books. We show how authorities can do this under existing law even beyond the prohibition of individual interlocks. We argue that a case can be made for seeing “investor-level interlocks”—two or more of an investor’s employees sitting on competitors’ boards—as acting as agents under control of the investor. Thus, such arrangements are already arguably illegal under section 8 of the Clayton Act.[footnote]See infra section IV.B.1.[/footnote]

The problem with relying solely on section 8, for both individual and investor-level interlocks, is that it fails to eliminate incentives because the typical remedy is simply removing the board member—meaning that the companies earn the gains from any anticompetitive conduct until they are caught and forced to stop. Consequently, we propose that courts view both individual and investor-level interlocking board members as adding evidence of collusion when there are signs of anticompetitive outcomes. In such cases, two employees working for a profit-maximizing investor have the opportunity and motivation to collude. That legal shift would allow for large financial penalties and criminal sanctions, thus providing meaningful deterrence under existing law.

Structural reforms might further reduce illegal board conduct, whether accidental or purposeful. As one example, whenever firms above a certain value threshold merge, they must submit a report to the FTC for approval.[footnote]See infra note 191 and accompanying text.[/footnote] A similar reporting requirement might be appropriate whenever a sufficiently sizable company adds a director who is also on the board of another company in the same industry.

We also think the remarkable disconnect between what the law requires and what companies do raises the question of whether a universal ban on interlocks is appropriate. In areas in which there are simply too few real experts, such as some emerging industries, the benefits of board expertise for early-stage companies may outweigh the risks of anticompetitive influence. If that is true, it would have implications for antitrust law because it would suggest that in some contexts the per se rule against interlocking boards should be relaxed. What little scholarship there is focuses on the benefits and not the harms of interlocks, contributing to the notion that antitrust law is out of touch with modern corporate governance.[footnote]Nili, for instance, understandably did not integrate the empirical evidence from other fields on how interlocking directors harm competition—because such evidence did not yet exist or was just emerging—but integrates considerable evidence on the importance of busy directors for firms. See Nili, supra note 6, at 1193 (“The primary value of having a busy director on a company’s board comes from a combination of a director’s experience, connections, and insider expertise, all of which less experienced and less networked directors may be unable to provide.”); see also Eldar & Grennan, supra note 16, at 581 (“We observe that having more [venture capital] directors, especially those with additional directorships, is associated with more growth and successful exits.”); supra note 26 and accompanying text; infra Part I, section III.A.[/footnote]

Our study should help shift the emphasis away from interlocking directors’ expertise to their influence and incentives. Previously, it would have been easier to portray these interlocking board members as simply high-in-demand, valuable board members whose very busyness simply happens to inadvertently create many innocent interlocks.[footnote]See, e.g., Nili, supra note 6, at 1192–94 (“Busy directors, and the interlocks they create, are a natural byproduct of corporate culture. ‘Because many companies seek operational and executive experience in their board nominees in order to raise investor confidence in the board,’ the pool from which companies elect directors is fairly limited.” (quoting Yaron Nili, Beyond the Numbers: Substantive Gender Diversity in Boardrooms, 94 Ind. L.J. 145, 158 (2019))).[/footnote] By providing insights into who these directors are and the broader investment infrastructure in which they sit, we show that such a generally optimistic view of interlocking directors is unwarranted. Antitrust law has not necessarily grown out of step with corporate governance. Corporate governance and the modern era of investment funding have combined to provide new ways of doing what the Clayton Act long ago sought to prohibit.

Indeed, there may be reason to expand the reach of the ban on interlocking directorates. First, many companies engage in conduct that is not currently a violation of the rule against interlocking directorates but that seems to have similar economic effects. The rule against interlocking directorates applies only to companies that are current competitors that draw revenue from the same market.[footnote]Clayton Antitrust Act of 1914, ch. 323, § 8, 38 Stat. 730, 732–33 (codified as amended at 15 U.S.C. § 19 (2018)).[/footnote] In the biotech industry, the process of regulatory approval takes years, and companies plan business strategies not only with respect to current competitors but vis-à-vis companies they can see have filed for approval of a new drug, even if the release of that drug is years away.[footnote]See Avinash Kumar Vivekanand Mishra & Anand Agrawal, Competitive Intelligence in Biotech Start-Ups: Strategies for Capturing and Leveraging Market Insights, 4 J. Informatics Educ. & Rsch. 4101, 4103–04 (2024) (noting that biotech companies can use regulatory filings to gain insight into competitors’ market strategies).[/footnote] Common directors can influence business strategy in a way that restricts future competition, something a law written long before the FDA was created does not address.[footnote]See infra section IV.B.2. Other scholars have proposed greater attention to acquisitions of nascent competitors. See, e.g., C. Scott Hemphill & Tim Wu, Nascent Competitors, 168 U. Pa. L. Rev. 1879, 1909 (2020) (“The acquisition or exclusion of unproven innovators is properly regarded as a core concern of antitrust law.”).[/footnote] We may want to expand the prohibition of interlocking directors to encompass pre-revenue companies with a realistic possibility of future competition, and there is a plausible argument that the statute was intended to encompass potential competitors.

Second, although we think that investor-level and not just personal interlocks should be seen as violations of the Clayton Act under existing law,[footnote]See infra sections III.B, IV.B.2.[/footnote] if they are not currently illegal, there may be reason to expand the prohibition against interlocking directorates. The laws prohibiting interlocks were written at a time when private equity and venture capital did not exist as we now know them, as incredible forces steering large portions of the economy.[footnote]See infra section III.B.[/footnote] But even if the same person doesn’t sit on the boards of competing companies, if partners of the same venture capital fund sit on competing boards, that raises similar concerns that animate the law against interlocking directorates.

Third, boards of directors have broadly failed to extend membership to women and minorities.[footnote]See, e.g., Deborah L. Rhode & Amanda K. Packel, Diversity on Corporate Boards: How Much Difference Does Difference Make?, 39 Del. J. Corp. L. 377, 379–80 (2014) (“According to the most recent data, women hold only 16.9% of the seats on Fortune 500 boards. . . . Among the Standard and Poor’s (S&P) 200, 13% of the companies have no minorities on their boards . . . .”).[/footnote] Multiple boards hiring the same people can exacerbate that problem. Thus, perhaps stronger antitrust law in this area would encourage not only innovation but also board diversity.

Finally, the surprising prevalence of common directors at both the individual and investor levels may help explain some of the otherwise puzzling economic effects of common ownership. Our data provides a basis for active investment funds, rather than solely passive investors, contributing to anticompetitive effects of common ownership. Active investors are also owners, albeit a different class of owners than those that were the focus of the common ownership literature. Further research is needed at the intersection of investors and interlocks to better understand the relationship to common ownership.

At a minimum, the complex analysis of whether interlocking directors are economically beneficial should be more explicit and informed by the sea of emerging evidence that it is problematic. Either companies need to follow the law, or policymakers should change that law if it is out of step with good policy. It is time to reexamine whether boards of directors can better serve competition with a healthier balance between norms and laws.

In Part I, we explain the history and doctrine of the law against interlocking directorates and how it fell into disuse in the past several decades before a recent revival. Part II introduces our empirical evidence and shows that potentially illegal board interlocks are widespread. In Part III, we discuss the effects of those interlocks on competition. Part IV suggests potential changes to the law and ways to encourage better compliance with it.

Empirical Research

ANTICOMPETITIVE DIRECTORS

HOW PARENTHOOD FUNCTIONS