Common Ownership and Mergers between Portfolio Companies

20 Pages Posted: 26 Jul 2019

See all articles by Roman Inderst

Roman Inderst

Goethe University Frankfurt

Stefan Thomas

University of Tuebingen - Faculty of Law

Multiple version iconThere are 2 versions of this paper

Date Written: July 23, 2019


The current debate on the competitive risks of common ownership has focused on whether passive index investments soften competition among portfolio companies. However, even if one concedes, in arguendo, that this is the case, it remains unclear in what way this bears on the analysis of horizontal mergers between portfolio companies. The EU Commission in Dow/DuPont and Bayer/Monsanto has alleged that common ownership is “an element of context in the appreciation of any significant impediment to effective competition”. In that respect we hypothesize that it should not be presumed that common ownership in itself increases anticompetitive effects of a merger between portfolio companies. Instead we posit that this depends on the facts of the case. The existence of common ownership might even mitigate post-merger unilateral effects if compared to the pre-merger counterfactual. We test our hypothesis on price competition as well as on innovation competition. Eventually, we map our conclusions onto the legal principles governing the burden of proof in merger cases.

Keywords: common ownership, Herfindahl-Hirschman Index, horizontal effects, innovation competition, merger control, unilateral effects

JEL Classification: L21, L22, L41

Suggested Citation

Inderst, Roman and Thomas, Stefan, Common Ownership and Mergers between Portfolio Companies (July 23, 2019). Available at SSRN: or

Roman Inderst

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60629
+49 (69) 798-34601 (Phone)
+49 (69) 798-35000 (Fax)


Stefan Thomas (Contact Author)

University of Tuebingen - Faculty of Law ( email )

Geschwister Scholl Platz
Tuebingen, 72074
0049-7071-29-72556 (Phone)
0049-7071-29-2105 (Fax)


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