By Tilman Kuhn, Partner, White & Case and Cristina Caroppo, Associate, White & Case Links between competitors based on investors’ parallel ownership of stock in them have come under the spotlight of the antitrust community. In particular, institutional investors – such as BlackRock, Vanguard or State Street – who invest into thousands of companies but hold only minority stakes that do not give them control (or “competitively significant influence” under German antitrust law), have become a focus of the recent debate. Although the empirical evidence that these shareholdings may have anti-competitive effects, and the underlying “theory of harm” is far from clear and convincing, the issue has found its way into at least the European Commission’s decisions and led to OECD meetings and FTC Hearings in the US. Therefore, it is likely here to stay, and investors and their portfolio companies (i.e., typically publicly listed companies) should take it into account when considering corporate transactions in industries with substantial common ownership. Here are five things companies need to know about the issue.
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