Common ownership refers to a situation where competing firms are owned by an overlapping set of investors. The antitrust theory of common ownership posits that firms whose investors own shares in competing firms in the same industry may have less of an incentive to compete with those firms. The theory highlights the incentives of investors rather than of firms and firm managers alone.
In “Common Ownership: What We Know and Where to Go from Here,” Jonathan Schwartz and his co-authors provide a review of the economic and legal literature on common ownership and suggest a potential framework for legal action under the existing antitrust laws. They also identify areas where additional information would be useful to better understand the incentives and mechanisms by which common ownership can result in anticompetitive outcomes, and they recommend that the Department of Justice (DOJ) and Federal Trade Commission (FTC) use their investigative authority to gather such information.
The paper was a culmination of a project sponsored by the Thurman Arnold Project at Yale University. Mr. Schwartz and his co-authors presented the paper to FTC and DOJ leadership, including Commissioner Rebecca Slaughter and Assistant Attorney General Jonathan Kanter, and discussed how the enforcers could act on the recommendations.
