Over the two-year period of this MSCA project, theoretical legal and economic analysis as well as comparative legal and institutional analysis of the problem studied was undertaken, empirical data informing the dimensions of the problem both in the US and Europe have been compiled and a novel taxonomy was developed to further illuminate the qualitative aspects and the distinct supporting mechanisms of the different varieties of the phenomenon studied.
The three completed publications relating to this MSCA project, culminating in the last one on “Varieties and Mechanisms of Common Ownership: A Calibration Exercise for Competition Policy”, develop a tailored, and comprehensive law & economic framework for the analysis of both cross- and common ownership. The work undertaken is ground-breaking in that it taps on and combines knowledge from different areas not only of law but also of economics (competition law & economics, corporate finance and governance) to produce novel insights with significant implications both for established theory and policy. The research undertaken exposes the limits of traditional concepts and tools used in merger control and its narrow fit to capture and address new types of partial ownership, e.g. of small, passive shareholdings of rival firms by overlapping institutional financial investors. This new variety of partial common ownership has been identified as “diffuse” common ownership in contrast to “concentrated” common ownership that has been dominating corporate governance theory and the substantive assessment and jurisdictional design of merger law frameworks. The study illustrated the limits of the EU merger control regime in comparison to other jurisdictions, as it relies on a formalistic conception of control, and the need to go beyond antitrust formalism. It was further shown that the formalism exposed has not only legal but also economic origins. That is, the existing economic models and theoretical assumptions informing analytical and quantitative tools used during merger control reviews are not well fit to the real dynamics involved in cases of “diffuse” common ownership. Given data collected from EU sources and legal and economic scholarship, it was confirmed that the EU competition law gap is real as the extent of the partial common ownership problem by large institutional investors in Europe is significant and growing, and not merely a US phenomenon as argued until recently. It was further illustrated how surrounding institutional, market, ownership and governance conditions in each jurisdiction may affect the plausibility and magnitude of potential effects, thus generalising the conceptual and analytical framework developed to holistically assess partial ownership in other legal systems beyond the EU. Based on this dual legal and economic assessment, the need for antitrust guidelines was highlighted. Concrete policy recommendations were put forward after comparing the costs and benefits of different policy and enforcement options.
The novel insights from this research have been communicated to competent EU policymakers and public enforcement agencies (European Commission, OECD, Swedish and Hellenic Competition Authorities) and to the wider academic, research and business or investment communities during conferences, public engagement and other policy-related or popular events.
