How Big a Problem Is It That a Few Shareholders Own Stock in So Many Competing Companies? (2024)

Summary.

Many critics claim that anti-trust enforcement has dangerously weakened since the 1980s, often citing the dominance of the tech giants as evidence of this. Others have noted rising concentration outside of tech: two-thirds of U.S. industries became more concentratedbetween 1997 and 2012. But a different form of monopoly has largely escaped the limelight. An emerging body of research alleges that trusts have returned in a more insidious form as ‘horizontal shareholdings’: investors that own significant shares in several competing firms. For example, there is substantial common ownership among U.S. airlines. Between 2013 and 2015,the seven shareholders who controlled 60% of United Airlines also controlled 28% of Delta, 27% of JetBlue, and 23% of Southwest. Together these airlines have over halfof domestic market share. Theory and evidence suggests that horizontal shareholding harms competition, consumers, and the economy.

• JG

  Jacob Greenspon is a researcher at the Martin Prosperity Institute.