By A. Neil Campbell

A burgeoning economics literature has raised concerns that “common shareholdings” by institutional investors in multiple public companies may give rise to soft competition and the exercise of market power in concentrated oligopolies. However, the legal and practical relevance of such shareholdings in merger analysis has not been carefully considered. In most cases – at least under well-developed merger control frameworks in jurisdictions such as Canada, the U.S., and the EU – consideration of common shareholdings is likely to be a giant waste of time for agencies, merging parties and third parties. In a merger review, it will be difficult for agencies to establish the causal connection to material increases in market power or how the mechanisms by which this will occur.