A new study illustrates the anticompetitive effects of horizontal shareholding in concentrated markets according to a Harvard Business Law Review article by Einer Elhauge, Professor of Law at Harvard Law School. Horizontal shareholding occurs where institutional investors own large portions of stock in competing companies. Scholars and antitrust lawyers including MoginRubin LLP’s managing partner, Dan Mogin, have acknowledged the danger posed by horizontal shareholding, particularly in concentrated markets, and called for increased scrutiny by antitrust enforcers in order to protect markets, competition, and consumers. This assertion is confirmed by Elhauge’s article stating that this practice violates both section 7 of Clayton Act and section 1 of the Sherman Act. Using new economic proofs and empirical evidence from the airline and banking industries as a basis to help explain longstanding economic puzzles, Elhauge illustrates how these effects extend beyond these industries, how antitrust law is the mechanism by which to address the anticompetitive effects and how conventional merger analysis must be changed to address this new threat to competition.
For related articles please click here.
For more on horizontal shareholding from Einer Elhauge click here.