Pick a concentrated sector, the airlines, the big banks, and trace the ownership of each competitor. At the very top of the register you will find the same three names: BlackRock, Vanguard, State Street. Yet when a single shareholder owns all the rivals, why would it want them to wage a price war? And there is no collusion, no merger to notify, no secret meeting: just a structure of ownership. The economic effect looks like that of a trust. But it is a trust no one ever signed, and that almost no one sees.
1 One owner, every rival
The same three names, everywhere.
The ubiquity
Largest shareholder of almost everything
Three index-management houses, BlackRock, Vanguard and State Street, nicknamed the "Big Three", have become the largest shareholder of roughly 88% of S&P 500 companies. They do not pick these firms: they replicate indices, so they own the whole market, and with it every competitor in each sector. Their stake in the capital of the index's typical company has nearly quadrupled in twenty years, rising from around 5% to more than 20%. Passive ownership, contrary to its name, is never neutral: it places the same hands at the table of every rival.
Largest shareholder
≈ 88%
of S&P 500 companies (Fichtner, Heemskerk & Garcia-Bernardo, 2017).
Average capital stake
5 → 20%
of the typical S&P 500 company between 1998 and 2017.
2 The three giants
A scale without precedent in the history of capitalism.
The sheer size
Nearly $30 trillion, between three
BlackRock alone manages nearly $13.9 trillion, Vanguard around $10 trillion, State Street nearly $5.6 trillion: together, these three houses steer close to $30 trillion, a slice of nearly the whole listed economy worldwide. And their weight exceeds their capital stake alone: because index funds vote almost all of their shares while many small investors abstain, the Big Three cast on average roughly a quarter of the votes at S&P 500 meetings. Two legal scholars from Harvard and Boston, Lucian Bebchuk and Scott Hirst, project that this share could reach 40% of the votes within about twenty years.
Votes cast
≈ 25%
on average at S&P 500 meetings, more than their capital stake.
20-year projection
≈ 40%
of the possible votes, if trends continue (Bebchuk & Hirst).
3 The suspicion, in figures
One study sounded the alarm.
Price inflation through ownership
Where ownership is shared, prices rise
In 2018, three economists, José Azar, Martin Schmalz and Isabel Tecu, published in the Journal of Finance a study that became famous: on US airline routes, where common ownership is strongest, fares were said to be higher, by around 3 to 7% (their published range runs from 3 to 12%). The same authors extended the analysis to banks: there too, the more ownership is shared, the higher the account-maintenance fees and the lower the rates paid to savers. To measure this phenomenon, they forged an index, the MHHI, which isolates the concentration attributable not to market shares, but to cross-ownership.
Air fares
+3 to 7%
attributed to common ownership, United States (Azar, Schmalz & Tecu, 2018).
Bank accounts
+ fees, − rates
higher fees and lower returns on savings (2022).
To keep in mind, cautiously
These figures made a great stir, but they are contested, and we shall return to that. For now, let us hold on to the suspicion: it could be that ownership, and not the mere size of firms, weighs on prices. It is a new idea, one that shifts our gaze from competition to its owners.
4 How, without the slightest collusion
The heart of the matter: no cartel is needed.
The silent channels
Rivalry dulls of its own accord
How can competition weaken without the slightest conspiracy? Because it is enough that interests align. Einer Elhauge, professor of law at Harvard, sums it up with an image: if you and I are competitors but our shareholders are the same, I have little interest in taking your customers; I would merely be taking money out of one pocket of my shareholders to go into the other.
Four channels, no secret rendezvous
①
No price war. A shareholder that owns all the rivals gains nothing from their cutting each other's margins.
②
No pressure for market share. No one, among the owners, pushes a firm to wrest customers from a "cousin" in the same portfolio.
③
Pay that tracks the sector. Where ownership is shared, executive pay is less tied to the performance of their own firm alone (Antón, Ederer, Giné & Schmalz, 2023).
④
Voting power. Holding a quarter of the votes confers, without a word, influence over boards and strategies.
The force of a structure
None of these channels requires a meeting, an email, a word. That is the unsettling beauty of the mechanism: the effect arises from the ownership structure itself, not from any guilty intent. One can obtain the result of a cartel without ever forming a cartel.
5 The return of the trust
History has already worn this face, in a gaudier form.
1882-1911
When Rockefeller placed every rival in the same hands
In the late nineteenth century, John D. Rockefeller invented the "trust": in 1882, the shareholders of dozens of competing refineries entrusted their shares in trust to nine trustees, who ran the whole as a single will. Standard Oil then controlled nearly 90% of American refining. It is precisely against this combination that antitrust law was born: the Sherman Act of 1890, then the breakup of Standard Oil by the Supreme Court in 1911 into some thirty companies, from which several of today's majors descend. Antitrust was born to break a visible concentration of ownership.
Standard Oil Trust
1882
nine trustees, ≈ 90% of American refining.
The breakup
1911
the Supreme Court splits the trust into ≈ 34 companies.
Elhauge's words
Here lies the full force of the parallel. As Einer Elhauge writes, "the historic trusts that were the core target of antitrust law were horizontal shareholders". In other words, today's common ownership is no exotic novelty: it is the exact return of what antitrust was conceived to combat. With one difference: it has lost its visible form.
6 Why "invisible"
The law knows how to fell a giant. Not a structure.
The blind spot
No merger to notify, no collusion to prove
Rockefeller's trust was plain to see: one entity, trustees, a single will. Common ownership, by contrast, offers no handle. There is no merger to declare: the funds replicate an index, they do not buy a particular competitor. There is no collusion to prove: the main anti-cartel statute, the Sherman Act, requires an "agreement", and here there is none. And there is no dominant firm to attack: none dominates its market; it is their owners who resemble one another. The danger is diffuse, and the law, cut for sharp targets, slides off it.
The Microsoft contrast
We measure this blind spot by comparing it to a case where the law was able to strike. In the late 1990s, Microsoft dominated the operating system of personal computers. The US government sued it in 1998 for abuse of dominance; a judge even ordered it split in two in 2000, before an appeals court overturned the breakup in 2001 and a settlement was reached. Facing a visible giant, a single identifiable firm, the law has its weapons, up to the nuclear option of a breakup. But the invisible trust offers no giant to aim at: only the same shareholders seated behind each of the rivals. That is the whole difficulty.
The "problem of twelve"
The legal scholar John Coates takes the reasoning to its conclusion in a 2023 book, The Problem of Twelve: as index management swells, a dozen people could soon wield practical power over the majority of large listed American companies. These are the "universal owners", holders of the whole market at once. Never had such a concentration of shareholder power existed, and it fits none of the categories of existing law.
7 The case against the obvious
Let us be fair: the effect is contested, and the tool has done good.
The counter-inquiry
The empirical proof wavers
Honesty compels us to say it: the numerical demonstration is disputed. In 2022, in the same journal as the founding study, three researchers, Patrick Dennis, Kristopher Gerardi and Carola Schenone, conclude that common ownership has no measurable anticompetitive effect in air travel: the observed correlation would stem from an artifact, the "market-share" component of the index, and not from ownership. Other economists, as early as 2017, had pointed to the same fragility. The original authors replied, their critics counter-replied: the debate remains open. The theory is solid; the measure of its magnitude, far less.
Index-fund fees
0.11%
against 0.59% for an active fund (2024).
Saved for investors
≈ $570 billion
in fees avoided over twenty-five years, according to Vanguard.
The two faces of passive management
For the very instrument accused of concentrating power has also enriched tens of millions of small savers, by driving fees down and democratizing access to the markets. More troubling still, the Big Three are accused of two opposing ills: "too powerful" for some, but "too passive" for others, who reproach them for under-investing in the oversight of firms and for siding too often with management. The portrait is not that of a conspirator, but of a distracted colossus whose sheer size warps the market.
8 When the law catches up
The law, long a spectator, steps onto the stage.
The first lawsuits
The awakening of antitrust
The subject has left the learned journals for the courtroom. In late 2024, a coalition of US states, led by Texas, sued BlackRock, State Street and Vanguard, accusing them of using their common ownership in coal producers to push for reduced output, and thus dearer energy. In May 2025, the federal authorities (the Department of Justice and the FTC) filed a joint statement of interest: it was the first time the agencies had officially taken a position in court on the antitrust implications of common ownership. The ground invoked: Section 7 of the Clayton Act of 1914, which prohibits stock acquisitions likely to lessen competition.
Federal position
May 2025
first FTC/DOJ stance on common ownership.
First settlement
$29.5 million
settled by Vanguard in February 2026, with no admission of fault.
A ridge line
The proceedings continue against BlackRock and State Street, a judge having refused in August 2025 to throw out the bulk of the claims. But the agencies trace a fine line: the mere passive holding of an index remains protected; what they target is the use of stakes in competitors to influence the supply of a market. The trial now opening will tell whether nineteenth-century law can grasp the twenty-first-century trust.
9 The choice, and the paradox
Remedies exist. A deep tension remains to be settled.
The balance
The same tool democratized and concentrated
Remedies have been proposed. The economists Eric Posner, Fiona Scott Morton and Glen Weyl suggest limiting each investor, in a concentrated sector, to 1% of the sector or to a single firm per sector, with purely passive funds remaining free. Others bet on the vote "passed through" to clients (pass-through voting), which BlackRock and Vanguard have begun to offer. But all these avenues run into a paradox: the instrument that concentrated ownership is also the one that democratized investment. One cannot want the low fees of indexing without accepting, a little, the power it aggregates.
The compass
①
A trust without being one. Common ownership reproduces the effect of a trust, without collusion, without a merger, without a visible form.
②
Contested, but not trivial. The magnitude of the effect is debated; the principle, however, is serious: passive ownership is never neutral.
③
The real question. Not to demonize index funds, which have served savers well, but to decide whether a diffuse power calls for new tools. This sheet sheds light on the debate; it does not give investment advice.
The trust no one signed
"Horizontal shareholding," writes Elhauge, "poses the greatest anticompetitive threat of our time, mainly because it is the one anticompetitive problem we are doing nothing about." It has no doubt been exaggerated; but we would be wrong to wave it away. The most powerful trust is perhaps not the one a Rockefeller assembles in broad daylight: it is the one that forms all by itself, from the simple fact that we entrust our savings to the same three houses. A trust no one ever signed, and that, for that very reason, is the hardest to undo.
Read alongside: The index is no longer a cushion, the other face of index concentration. Reference: abbreviations & acronyms (S&P 500, MHHI, FTC, DOJ).