In July 2017, the German Government released a statement on common ownership. The statement responds to a report by the German Monopolies Commission (an independent advisory body composed of experts which publishes regular reports and special opinions on competition law issues), released in September 2016 (read our earlier alert here). The Monopolies Commission expressed the view that a certain potential for distortions of competition caused by common ownership cannot be excluded. However, it refrained from providing any direct recommendation on economic policy and stated that further research on the topic was needed.
The German Government’s response to this report is cautious. The statement agrees that further research is needed. Interestingly, the German Government goes on to criticize previous research, stating that there is a “fundamental problem in the empirical study of the phenomenon”. The German Government recognizes that institutional investors can be pursuing different objectives and investment strategies, even in the case of parallel minority interests. For example, stock funds and pension funds of the same investment company would typically pursue different interests. The statement concludes that the mere possibility of certain anti-competitive effects cannot lead to a general accusation of institutional investors.
Policymakers continue to monitor common ownership. For the time being, they appear reluctant to take action until there is conclusive evidence of the anti-competitive effects of common ownership. Institutional investors and companies that seek to attract institutional investors should follow any new developments in this area and carefully structure their investment interests to take possible future changes in policy or legislation into account.