Monday, July 31, 2017
Einer Elhauge, Harvard sounds the alarm about The Growing Problem of Horizontal Shareholding.
ABSTRACT: Horizontal shareholding exists when significant shareholders have stock in horizontal competitors. (It is often imprecisely called "common shareholding," but that term can also apply when shareholders own stock in two noncompeting corporations. It differs from "cross-shareholding," which describes situations when firms own stock in each other, though cross-shareholding is effectively a special case of horizontal shareholding when the firms are competitors.) This Article presents new evidence confirming that horizontal shareholding has anticompetitive effects harmful to our economy and showing that the problem is only getting worse. It also rebuts various critiques of my proposal that high levels of horizontal shareholding in concentrated markets should be investigated and subject to antitrust enforcement when they are shown to have anticompetitive effects.