By Keith Klovers (Wilson Sonsini Goodrich & Rosati) & Douglas H. Ginsburg (George Mason University)
Some scholars have argued that the phenomenon known as common ownership, particularly by large investment managers, is anticompetitive and prohibited by the U.S. antitrust laws. These proponents call for the divestiture of trillions of dollars of equities. We believe the argument for antitrust enforcement against common ownership is misguided. First, proponents conflate management by investment managers and economic ownership by individual account holders and therefore incorrectly attribute allegedly anticompetitive conduct to the investment managers. Second, proponents substantially overstate the validity and strength of the existing empirical work purporting to show common ownership causes anticompetitive harm. Third, proponents overstate their legal case, both by relying upon inapplicable cross ownership cases and by stretching the holdings of those cases. Fourth, at bottom proponents concerns are with either conscious parallelism, which is not illegal, or anticompetitive conduct that, if proven, could be addressed using established antitrust doctrines applicable to hub-and-spoke conspiracies and the anticompetitive exchange of information.
