Institutional investing's potential anticompetitive effects to be examined by DOJ, top antitrust enforcer says

02 Apr 2020 12:40 pm by Amy Miller

The US Department of Justice’s antitrust division will examine in the coming months whether institutional investing can have anticompetitive effects, the US Justice Department’s top antitrust enforcer said this week.

Makan Delrahim, the DOJ’s assistant attorney general for antitrust, said at a conference in Boulder, Colorado, that he had recently read articles by Einer Elhauge, a Harvard Law professor who argues that common ownership could violate antitrust laws in concentrated industries.  

Elhauge's common-ownership theory holds that when groups of big investors hold material equity stakes in several companies in the same industry, they can foster anticompetitive conduct with the goal of making more money.

Delrahim said he doesn't “totally agree” with Elhauge’s theory, but the DOJ should explore whether companies that know their largest shareholders are also shareholders in their largest competitors behave differently “from a competitive standpoint.”

“It’s a fascinating area to see whether or not competition laws pay attention,” Delrahim said. "But there are so many others."

The DOJ, he said, should also be “vigilant” and look into potential anticompetitive conduct among technology companies and online platforms.

However, he said he doesn’t agree with the argument that the offering of better products and services by online companies can be a “defense to an otherwise illegal violation of the antitrust laws.”

“I think that’s the wrong way to look at it,” Delrahim said, adding that hopefully courts will agree.

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