FTC Hearing #8: Common Ownership

December 2018

FTC Hearing #8: Common Ownership By Noah Pinegar (Paul Hastings)¹

The eighth of the FTC’s Hearings on Competition and Consumer Protection in the 21st Century, held at New York University School of Law on December 6, 2018, focused on common ownership.  Common ownership is defined as shareholdings by a single investor, short of controlling interests, in multiple companies that compete with one another.²  Common ownership theories of antitrust harm posit that, notwithstanding the inability of a single investor to control the company in which it owns shares, holding shares in competing companies simultaneously causes those companies to compete less aggressively.

The hearing largely centered around: (1) the current state of academic literature analyzing the relationship between common ownership and higher prices within product markets; (2) how common ownership might cause higher prices; and (3) factors to determine whether antitrust intervention is warranted.

The Current State of Research Analysis

Martin Schmalz, of the University of Michigan Ross School of Business, described a number of academic papers written to date that show a correlation between common ownership and higher prices, and suggested that no empirical evidence supports efficiency enhancing effects from common ownership.  Schmalz acknowledged shortcomings in the data, which Christopher Conlon, NYU Stern School of Business, later described as “unusually bad.”  Still, Schmalz argued that give