Five things investors and listed companies need to know about the common ownership debate and why it matters
Links between competitors based on investors' parallel ownership of stock in them have come under the spotlight of the antitrust community.
In an article for Global Banking & Finance Review, White & Case partner Tilman Kuhn and associate Cristina Caroppo look at investors and their portfolio companies should take it into account when considering corporate transactions in industries with substantial common ownership, including how the issue comes into play in antitrust practice, existing case law on the debate and what can be expected in the future.
Kuhn and Caroppo write: "The claims for action – i.e., increased merger regulation in "concentrated industries"[vi], regulatory approaches regarding limited investing opportunities, etc. – will not pass by without a trace and could in particular drastically decrease the benefits of passive index fund investments. It may also impede pro-competitive mergers between portfolio companies.
"Especially in light of the far-reaching conclusions the Commission reached in its Dow/DuPont decision, it will be difficult for companies to find arguments against the Commission's critical attitude towards common ownership structures that fits the antitrust authorities' currently prevailing perception that many markets are too concentrated and that income and wealth inequality is growing."
To read more about the issues relating to parallel ownership of stock, click here to go through to the Global Banking & Finance Review article.