The fascinating theory of common ownership under the lens of competition law practitioners: any needs to rethink the antitrust toolbox?

Abstract

During the last years there has been a prolific academic debate on the possession by institutional investors of minority shareholdings in firms active within the same industry, leading to a potential distortion of market dynamics (the so-called “common ownership” theory). The common ownership doctrine raises a number of questions, and it should be looked at with caution in light of the prejudice that an incorrect antitrust assessment may have over the activities of financial institutions. This article attempts to clarify the reasons why the still new and fascinating theory of common ownership as a means of distortion of market dynamics has a long way to go before being an antitrust enforcement priority. It is debatable the same notion of the existence of a direct causality between common ownership and anticompetitive effects, whereas alternative variables may explain why in a certain period a rise in prices has been observed. In any event, even if potential antitrust risks were effectively found to materialize, the traditional competition law toolkit and the current regulatory obligations to which institutional financial investors have to comply with are suitable and sufficient to deal with the potential concerns that the common ownership theory eventually brings about and case-by-case evaluations are typical of and should guide any competition law theory of harm.

Keywords

• competition law
• antitrust
• economics
• institutional investors
• investment funds
• common ownership