Two competing companies can belong, for the most part, to the same shareholders. If those shareholders own both at once, do they have any interest in seeing them wage a price war? The idea that the ownership of firms, and not merely their number, shapes competition has a name: common ownership.
1 The definition
The same owners across the rivals.
Common (horizontal) ownership
One shareholder across several competitors
There is common, or "horizontal", ownership when one and the same set of investors holds significant stakes in firms that compete with one another in a market. The phenomenon has reached an unprecedented scale with index management: a fund that replicates an index mechanically holds all the players in a sector. The three large passive managers, BlackRock, Vanguard and State Street, have thus become the largest shareholder in roughly 88% of the companies of the S&P 500.
2 The effect without collusion
How competition can weaken without a cartel.
The alignment of interests
The outcome of a cartel, without a cartel
The effect presupposes no conspiracy: it is enough for interests to align. A shareholder who owns all the rivals gains nothing from seeing them shred each other's margins; no one pushes a firm to wrest customers away from a "cousin" in the same portfolio; executive pay becomes less tied to the performance of their own company alone; and voting power confers a diffuse influence. The scholar Einer Elhauge sums it up: if two competitors have the same shareholders, one no longer has much interest in taking customers from the other, "that would be taking money out of one pocket to put it into the other".
3 The invisible trust
A sense of déjà-vu, only less conspicuous.
The historical parallel
The original target of antitrust, back without its form
At the end of the nineteenth century, the "trusts" (Standard Oil) placed the shares of competitors in the same hands; antitrust was born to break them up (Sherman Act, 1890; dismantling of Standard Oil, 1911). As Elhauge writes, "the historic trusts… were horizontal shareholders". Common ownership therefore reproduces that effect, but with no visible form: no merger to notify, no agreement to prove, no dominant firm to attack. The law, designed for clear-cut targets, struggles to grasp this diffuse concentration. Section 7 of the Clayton Act (1914), which targets share acquisitions that lessen competition, is the most discussed avenue for tackling it.
4 The debate
A serious thesis, but a contested one.
For and against
The magnitude of the effect is not settled
The founding study (Azar, Schmalz & Tecu, 2018) estimated that common ownership raised American airfares by something on the order of 3 to 7%. But a rebuttal published in the same journal (Dennis, Gerardi & Schenone, 2022) attributes that correlation to a measurement artefact, not to ownership: the debate remains open. Conversely, the passive management that produces this common ownership has also driven fees down and democratised investing. The thesis must therefore be handled with nuance: the principle is serious, its quantified magnitude uncertain.
5 Takeaways
To remember.
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Common ownership: the same investors hold several competitors in one and the same market.
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Possible effect: a dulled rivalry, without the slightest collusion, through the mere alignment of interests.
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The "invisible trust": the effect of a trust without a merger, without a cartel, without visible form; hard for classic antitrust to grasp.
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Open debate: the empirical magnitude is contested, and passive management has also served savers.
This notion sheds light on an analysis
First published: 25 June 2026