Introduction to Special Issue on Common Ownership and Interlocking Directorates

Abstract

Common ownership by institutional investors—of minority stakes across multiple competing firms—has become a subject of heated debate in the antitrust community. Although often driven by portfolio diversification strategies, rather than anticompetitive intent, common ownership can result, in some sectors, in the concentration of financial ownership, with possible anticompetitive effects. Over the years, competition authorities on both sides of the Atlantic have taken note. For example, in 2018, the U.S. Federal Trade Commission held a hearing on common ownership.1 In the same year, Margaret Vestager, at that time the Competition Commissioner at the European Commission, stated that the Commission is “looking carefully” at common ownership given indications of its increase and potential for anticompetitive effects.2 In 2017, the Competition and Markets Authority (CMA) examined the extent of common ownership in the banking, insurance, and grocery retailing industries in the United Kingdom.3 Closely related, but currently less discussed, is the question of interlocking directorates among competing companies (companies sharing corporate board members). One key issue is whether these can soften competition, either on their own or in combination with financial links. Although in the United States, Section 8 of the Clayton Act expressly prohibits interlocking directorates between competitors, there is no such prohibition in the EU (apart from Italy in the financial sector). In spite of the prohibition in the United States, the FTC recently stated that interlocks still raise competitive concerns.