In this article published in the Fall 2021 issue of ABA’s ANTITRUST magazine, CRA’s Isabel Tecu surveys how the conclusions from her influential study of anti-competitive effects of common ownership have held up to new insights generated since its publication seven years ago.
The original study that she co-authored back in 2014, “Anti-Competitive Effects of Common Ownership” (AST), documented that financial investors frequently hold ownership interests in competing firms, which we referred to as “common ownership.” It further found that common ownership among airlines was likely causing higher airline ticket prices, thereby providing potentially the first empirical evidence that this ubiquitous ownership pattern was reducing competition.
Since the publication of that study, the debate about the competitive implications of common ownership has taken off. In the seven years since, common ownership has been the subject of an OECD roundtable, a Federal Trade Commission hearing, and a 300-page study commissioned by the European Commission (EC). It has been discussed by US and European antitrust officials and cited in a major EC merger decision. It has been hotly debated by an impressive list of leading antitrust scholars, resulting in several sharply conflicting policy proposals. And finally, it has become the subject of a long line of new economic research that has methodologically refined the measurement of common ownership and its impact, while variously finding anticompetitive, procompetitive, or no effects of common ownership on specific aspects of competition in specific settings.
Dr. Tecu’s new article provides a bird’s-eye view on how AST’s original conclusions have held up to new insights generated since its publication, without attempting to give justice to the overwhelming number of papers on the topic that have been written since. She finds that AST has been attacked on theoretical and empirical grounds, and that its critics have offered many insights that have helped to refine the thinking on common ownership and have moved the debate forward. But, as Dr. Tecu explains in this article, none of the critiques against AST has seriously challenged the plausibility of a causal link between common ownership and adverse effects on competition, or of AST’s empirical results.