Common Ownership of Competing Firms: Evidence from Australia

Andrew Leigh and Adam Triggs ()
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Adam Triggs: Australian National University

No 14287, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We provide the first estimates of the extent of common ownership of competing firms in Australia. Combining data on market shares and substantial shareholdings, we calculate the impact of common ownership on effective market concentration. Among firms where we can identify at least one owner, 31 percent share a substantial owner with a rival company. Analysing 443 industries, we identify 49 that exhibit common ownership, including commercial banking, explosives manufacturing, fuel retailing, insurance and iron ore mining. Across the Australian economy, common ownership increases effective market concentration by 21 percent. Our estimates imply that if listed firms seek to maximise the value of their investors' portfolios, then they place the same value on $3.70 of their competitors' profits as on $1 of their own profits. We discuss the limitations of the available data, and the potential implications of common ownership for competition in Australia.

Keywords: antitrust; Modified Herfindahl-Hirschman Index; Herfindahl-Hirschman Index; market concentration; horizontal shareholding; competition (search for similar items in EconPapers)
JEL-codes: D42 D43 L11 L12 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-04
New Economics Papers: this item is included in nep-com and nep-ias
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Citations: View citations in EconPapers (5)

Published - published in: Economic Record, 2021, 97 (318), 333-349

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Journal Article: Common Ownership of Competing Firms: Evidence from Australia (2021)
Working Paper: Common Ownership of Competing Firms: Evidence from Australia (2021)
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