Antitrust Permissibility of Interlocking Directorates Unclear in light of Recent Case Law

Introduction

In its decision B-1411/2022 of 5 June 2026, the Swiss Federal Administrative Court ("FAC") set out important parameters on so-called interlocking directorates between competing undertakings. The Court held that reciprocal representation on the boards of directors of competing undertakings may constitute an agreement affecting competition if it enables the exchange of competitively sensitive information and no appropriate safeguards are in place to prevent the use or disclosure of that information.

Given that interlocking directorates are not uncommon in practice, the decision is of broad relevance for corporate governance structures.

The FAC's decision is not yet final and may still be appealed to the Swiss Federal Supreme Court.

This article sets out the FAC's reasoning on interlocking directorates and analyses the practical implications of the decision.

Facts and Procedural History

On 5 March 2019, the Secretariat of the Swiss Competition Commission ("Secretariat") opened a formal investigation against several undertakings concerning a possible unlawful agreement affecting competition in connection with the production of asphalt mix. Among those undertakings was BERAG Belagslieferwerk Rubigen AG (the appellant; hereinafter "BERAG"), a joint venture established by 15 gravel and road construction companies with the purpose of operating a plant for the production of asphalt mix, as well as numerous other undertakings active in the gravel and road construction sector.

The Secretariat's investigation concerned, among other matters, the cooperation between BERAG and a competing shareholder undertaking, BLH Belagswerk Hasle AG (hereinafter "BLH"). Between 1995 and early 2019, the two undertakings granted each other representation on their respective boards of directors. The authority claimed that, through these interlocking directorates, the respective board representatives obtained access to competitively sensitive information about business activities and business developments of the other undertaking.

In its decision of December 2021, the Swiss Competition Commission ("ComCo") qualified this information exchange, which was enabled by the reciprocal board representation, as an unlawful agreement affecting competition. It found that the agreement to grant each other an interlocking directorate had the object of facilitating the exchange of expertise, aligning interests and enabling each undertaking to exert influence over the other's strategic decisions. The information exchanged included pricing information as well as other parameters, such as production costs, volumes, revenues, sales figures, capacities, quality, marketing plans, risks, investments and technologies. This enabled each undertaking to anticipate the competitive conduct of the other. According to ComCo, the agreement was therefore objectively capable of restricting competition. No overriding grounds for economic efficiency were apparent.

BERAG appealed ComCo's order to the FAC, arguing, among other things, the granting of the interlocking directorate and the resulting exchange of information did not constitute an unlawful agreement affecting competition.

Legal Considerations of the Swiss Federal Administrative Court

By decision B-1411/2022 of 5 June 2026, the FAC confirmed ComCo's order. The Court held that the reciprocal board representation between the two competing undertakings provided the basis for an exchange of competitively sensitive information. A board mandate is necessarily associated with access to information concerning the affairs of the undertaking. Through their participation in the other undertaking's board meetings, the respective representatives obtained access to information on that undertaking's business activities and business development.

In the FAC's view, it was also relevant that, notwithstanding the conflict of interest arising from the dual mandate, the two undertakings had not provided for any effective rules, limitations or safeguards governing the handling of information obtained through the board mandates.

On this basis, the FAC concluded that there was an implied consensus, and therefore an agreement between the two undertakings, not only in relation to the interlocking directorate itself but also regarding the exchange of information enabled by it.

Since the information exchanged concerned relevant competitive parameters, namely price, quantity, research and development, and competitively sensitive revenues, the FAC qualified the information exchange as an agreement affecting competition. The agreement was aimed at restricting competition (by object restriction), as the exchange of information allowed the parties to infer competitors' future market strategies and thereby reduced or eliminated the uncertainty that would normally exist regarding other market participants' reactions to one's own competitive conduct.

The Court left the question open whether the information exchange concerning prices, supply areas and other matters constituted a hard-core agreement within the meaning of Article 5 paragraph 3 of the Cartel Act, which is presumed to eliminate effective competition, since, by that time, the agreement had no longer been implemented for more than five years.

Against this background, the Court examined whether the information exchange nevertheless constituted a significant, and therefore unlawful, agreement affecting competition within the meaning of Article 5 paragraph 1 of the Cartel Act. It answered that question in the affirmative from both qualitative and quantitative perspectives. Grounds of economic efficiency capable of justifying the information exchange were not applicable.

The FAC further upheld the behavioural measures ordered by ComCo to prevent a recurrence of the unlawful information exchange, including a ban on appointing representatives of competitors to the board of directors. This ban applied to competitors located within a 90-minute driving radius. In particular, the Court held that recusal rules or technical and organisational measures would result in board members being hardly able to fulfil their statutory duties, which is why a prohibition was necessary in the case at hand. Referring to ComCo's decision, the Court considered other less restrictive measures, in particular recusal rules or technical and organisational arrangements such as so-called "chinese walls", to be unsuitable for effectively preventing access to competitively sensitive information.

Comments and Practical Implications

The FAC's decision raises doubts as to whether interlocking directorates between competitors remain permissible under antitrust law at all. According to the Court's reasoning, interlocking directorates between competitors entail significant antitrust risks and that these risks may be difficult to eliminate completely. However, the decision suggests that the issue is not the mere fact that a board member has access to information, since such access is necessarily inherent in the board mandate. Rather, the concern appears to arise from the combination of reciprocal interlocking directorates between competitors, regular access to competitively sensitive information and the absence of appropriate rules or safeguards.

On the topic of safeguards, it is noteworthy that the Court, in the case at hand, found that recusal rules as well as technical or organisational safeguards could result in board members no longer being able to fully perform their statutory duties. Against this background, the Court considered a prohibition on appointing representatives of competitors to the board of directors to be the least restrictive effective measure. The decision thus implies that a prohibition may be the only practicable solution where less restrictive measures either fail to provide sufficient protection or prove incompatible with the board member's statutory duties. This raises the question of which safeguards remain that can both eliminate the competition law risk to the Court's satisfaction and preserve the board member's duties in full.

Therefore, while we do not consider the decision at hand to impose a general prohibition on interlocking directorates, it does place significant constraints on this practice. Going forward, it will be necessary to assess carefully, on a case-by-case basis, whether safeguards such as recusal rules or information barriers are sufficient to prevent the use or disclosure of competitively sensitive information while still allowing the board members to perform their statutory duties in full. This may become particularly difficult in concentrated markets with only a few market participants.