Over the last twenty years, the degree of common ownership of large public companies has increased considerably. In 2015, BlackRock Inc. and Vanguard Group were both top-five owners in over half of the publicly listed firms in the U.S. and Canada (Park et al. 2019). Several recent studies have raised concerns that overlapping ownership can lead to anticompetitive product market outcomes (e.g., Azar et al. 2016, Xie and Gerakos 2018). This would happen naturally if managers take actions that are in their shareholders’ best interests and their shareholders seek to maximize the value of their market- or industry-wide portfolio. Some studies have even gone so far as to recommend that antitrust regulators should limit large institutional investors to either holding only a small stake (< 1%) in any industry or holding no more than a single firm per industry (Posner et al. 2017). While the theoretical concern is well-founded, several academics and practitioners have voiced doubts about whether common ownership actually leads to anticompetitive outcomes, largely due to the passive nature of the large common owners and the low plausibility of, for instance, asset managers influencing capital structure, payout policies, board composition, or specific company practices like airline route choices or checking account fees (Hemphill and Kahan 2018, Koch et al. 2021). In short, prior literature does not provide clear evidence of a plausible mechanism through which common ownership could affect product market outcomes in an economically meaningful way.

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