Financialisation of the Food Value Chain, Common Ownership and Competition Law

Abstract

The paper delves into the implications of the financialisation process for competition law enforcement. We consider that the recent debate over common ownership and its impact on competition law and policy integrates one of the dimensions of the financialisation of the economy. This paper offers the first attempt for a theoretical analysis of this topic, focusing on the process of financialisation in the food industry. We explore the possibility that common ownership may constitute a competition concern, raising issues of unilateral effects, horizontal collusion, vertical exclusion and vertical exploitation. This discussion is particularly important in the context of Food Value Chains, with the rise of common ownership as one of the manifestations of the broader trend of the financialisation of the food industry. Many institutional investors are passive investors in the diverse companies that are active at various segments of the Food Value Chain. Although this paper focuses solely on the seed/agro-chem sector, it is possible to identify considerable common ownership in other parts of the Food Value Chain as well, particularly in the segments with the highest levels of economic concentration. In view of the possible negative welfare effects of common ownership on competition and its prevalence in the food sector, it is contended that competition authorities need to develop adequate legal tools to deal with this issue and rely on economics but also other sources of wisdom (e.g. advanced social network analysis) that may enable a better mapping of the complexity of competitive interactions in this sector and be more adequate in the context of a complex economy. Further research will explore the latter issue.