What is an interlocking directorate?

Social Psychology (10th Edition)
10th Edition
ISBN:9780134641287
Author:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers
Publisher:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers
Chapter1: Introducing Social Psychology
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What is an interlocking directorate?

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Interlocking directorates is a business practice wherein a member of one company's board of directors  also serves on another company's board or within another company's management. Under the antitrust legislation, interlocking directorates are not illegal as long as the corporations involved do not compete with each other.

Interlocking directorates were outlawed in specific instances wherein they gave a few board members outsized control over an industry. In some cases, this opened the door for them to synchronize pricing changes, labor negotiations, and more. Interlocking directorates does not prevent a board director from serving on a client’s board.

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