Abstract
Capital structure and financial policies can raise anticompetitive concerns to the extent that they induce rival firms to compete less aggressively. In contrast to common ownership, anticompetitive concerns triggered by financial leverage being ratcheted up in parallel across rival firms can be the result of legitimate prudent underwriting standards that mechanically steer managers to adopt a softer competitive stance in order to secure debt refinancing. By the same token, increasing leverage in parallel can be opportunistically deployed by rival firms to coordinate and sustain a tacitly collusive agreement. A close scrutiny of the existing theoretical and empirical literature is supportive of this antitrust theory of harm.
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