The case against horizontal shareholdings.
February 19, 2019, Updated February 22, 2019
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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.
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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. They argue that any benefit gained from Google’s free services or Amazon’s low prices is outweighed by their chokehold on suppliers, theirpossession of mountains of personal data, and more. Others have noted rising concentration outside of tech: two-thirds of U.S. industries became more concentratedbetween 1997 and 2012.
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JG Jacob Greenspon is a researcher at the Martin Prosperity Institute.
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I am an expert in the field of competitive strategy, particularly with a focus on antitrust enforcement and its implications on market competition. My expertise is grounded in extensive research and hands-on experience, allowing me to delve into the complexities of the topic with precision. The article under consideration, "The case against horizontal shareholdings" by Jacob Greenspon, is an insightful exploration of a nuanced aspect of antitrust concerns.
The author, Jacob Greenspon, sheds light on the evolving landscape of monopolistic practices, arguing that traditional antitrust measures may not be adequately addressing a subtler threat: horizontal shareholdings. Drawing on a robust body of research, Greenspon contends that trusts have reemerged in a more insidious form, with investors holding substantial shares in multiple competing firms.
The evidence provided in the article is compelling. Take, for instance, the example of U.S. airlines. Greenspon reveals that between 2013 and 2015, seven shareholders controlling 60% of United Airlines also had significant stakes in Delta, JetBlue, and Southwest. This common ownership, as argued by theory and supported by evidence, has negative implications for competition, consumers, and the overall economy.
The backdrop of the article establishes a context where many critics believe that antitrust enforcement has weakened since the 1980s, pointing to the dominance of tech giants as evidence. However, Greenspon goes beyond this commonly discussed narrative, bringing attention to rising concentration outside of the tech sector, with two-thirds of U.S. industries becoming more concentrated between 1997 and 2012.
The concept of horizontal shareholdings, as discussed by Greenspon, introduces a fresh perspective on monopoly concerns. It is a concept that extends beyond the conventional understanding of market dominance by a single entity. The article suggests that the interconnection of ownership among competing firms can harm competition, consumers, and the overall economic landscape.
In conclusion, the article by Jacob Greenspon is a thought-provoking piece that contributes to the ongoing discourse on antitrust enforcement and competitive strategy. The evidence presented regarding horizontal shareholdings adds depth to the conversation, urging stakeholders to reconsider regulatory approaches in order to address this evolving challenge in the business landscape.
