Over the past few years, we’ve blogged about the DOJ’s enforcement push targeting violations of the Clayton Act’s prohibition on interlocking directorates. That push has resulted in a few handfuls of director resignations, but a new study from a group of Stanford & Boston University law professors suggests that antitrust regulators have a lot of work left to do when it comes to director interlocks. In fact, their study claims that the level of non-compliance with Section 8 of the Clayton Act is simply shocking:

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 new dataset that enables us to provide the first analysis of board members on both public and private companies—rather than just public companies—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 about which we have data on at least five board members, 8.1% had an individual interlock.

The study says that interlocks are particularly common in the IT and life sciences industries, and claims that over 18% of pharma & biotech companies have at least one director who sits on the board of a direct competitor, while over 10% of IT software companies find themselves in the same position.

I’d be very surprised if the results of this study escaped the FTC & DOJ’s attention, so public and private companies would be smart to raise the consciousness of their boards about this issue and address any problems that are identified. Regulators haven’t typically sought to impose fines or penalties for interlocks violations, but they do force directors off of the board, which is disruptive and can cause reputational damage.

If you’re looking for some thoughts on how to prevent Clayton Act violations, check out this Forbes article by Woodruff Sawyer’s Priya Cherian Huskins.

– John Jenkins