Corporate Governance and Competition Policy

Spencer Weber Waller, Loyola University Chicago

Abstract

Corporate Governance and Competition Policy

Spencer Weber Waller

Abstract

Corporate governance law addresses the misaligned incentives between officers and directors of publicly-owned companies and their shareholders, and how this can lead to the destruction of shareholder value. Antitrust law governs the interaction between corporations and other economic actors in the marketplace and prohibits and penalizes anticompetitive agreements, unilateral conduct which unreasonably injures competition, and mergers and acquisitions which may substantially lessen competition.

This article explores the puzzling lack of meaningful interaction between these two fields of law which govern the internal and external operations of key economic players in our economy. This article goes beyond the conventional disconnect and discusses how to create a more unified approach to two key area of business law in order to promote the interests of both shareholders and consumers in a more systematic and meaningful way.

In order to better draw the links between the two fields and create an ongoing conversation between different fields, different working professionals, different types of expertise, and even different languages, I proceed as follows. In Parts I and II, I briefly describe the traditional view of both the scope and content of corporate governance and antitrust law. In Part III, I then offer an overview of why there has been little overlap or interaction between these critically important bodies of business law.

Part IV examines five key areas of antitrust law where a greater knowledge of, and appreciation for, the modern learning in corporate governance law would provide for both better competition compliance and more effective corporate governance law and policy. These key areas include hard core cartels; interlocking directorates; anticompetitive agreements under the rule of reason; merger policy; and monopolization.

I then begin the process of how to do better. Certain of the changes fall on the corporate governance side including greater duties and liabilities for officers and directors to prevent harmful and illegal conduct that injures shareholders. Other changes fall on the antitrust side of the fence including a greater skepticism for claims of synergies and efficiencies in certain categories of mergers that have proven time and time again to nothing to enhance shareholder value except when competition is harmed. But the most important change will be a greater willingness for practitioners and policymakers to more directly coordinate so corporate actors can pursue legitimate strategies to build value for shareholders and prevent unlawful anticompetitive behavior and, at the same time, not pursue more dubious strategies that currently fall between the cracks of both bodies of law.