Interest in the potential anticompetitive effects of “common ownership” – defined as stock ownership in competing companies by an investor holding less than control amounts – has emerged from recent studies that suggest a correlation between common ownership and higher prices in certain concentrated industries. The empirical evidence is under development and debate, yet proposals have already been made to restrict the ownership stakes of institutional investors. Antitrust policy development in this area should be approached with great care given the relatively early stage development of the evidence, the ongoing debate about whether the evidence of an anticompetitive effect is sufficiently durable and robust, and the potential implications a restrictive investment rule would have on institutional investors’ beneficial roles in satisfying consumer interests in diversified investment vehicles for retirement and college savings, and in promoting improved corporate governance practices. This article discusses corporate governance issues related to the common ownership debate.
CPI Antitrust Chronicle
Competition and Common Ownership – A Governance Perspective