[This article has been authored by Siddhant Bhasin and Pragya Saraf, students at Jindal Global Law School, Sonipat. This article aims to identify the threat that interlocked directors can have on the consumers’ interests and on the business environment in India.]
The paper seeks to highlight the issue of interlocked directors within companies in India. They are persons who are on the board of two or more companies or have represented the same investor in two or more competing firms. This practice provides a channel of information as well as decision making which, if coordinated by competing firms can be detrimental to competition and adversely affect consumers’ interest. Currently under Indian law, there is no express bar on interlocked directorates, which limits the ability of competition authorities to tackle such issues head-on. Consequently, heavy reliance becomes extensions of other general principles on a case-to-case basis. In this paper, we look at other jurisdictions for inspiration to help arrive at a legal solution that is suitable to India. A comparison is drawn between the approach of India and the EU and the contrast of both of those approaches with the United States. A number of other developing economies (China, Japan & South Korea) which have already dealt with the subject are reviewed to understand the different institutional approaches. Contextualising the responses of competition authorities around the world, with the circumstances in India, a number of recommendations are made, including – the need for legislative intervention, the threshold of prohibition and the requirement of government-regulator collaborations. These steps are important to safeguard the competition environment and fulfil the objective aims of Indian competition law.