Common shareholding is the simultaneous ownership of shares in many firms active in the same sector. Common shareholders are typically institutional investors (banks, pension funds, insurance companies or mutual investment funds), who hold stakes below the level of control and do not actively participate in firms’ decisions. Even if traditionally common shareholding has not been seen as an antitrust issue, in recent years researchers have started to consider its potential anticompetitive effects. Scholars have raised concerns that common shareholding could have anticompetitive effects when a common owner has a majority control over at least one of the firms, and minority
stakes in competing companies; still, little is known about common shareholding by institutional investors, whose control seems to be limited to minority voting rights. Such institutional investors have for long implemented a passive investment strategy, whereby fund managers
invest the assets of their customers following an index. At the same time, they collect the voting rights of their customers and potentially gain some influence on the management decisions of the firms they are mandated to invest in. As a result, fund managers have acquired
substantial shares - always on behalf of their customers - in a large number of firms that in many cases are direct competitors, creating a new corporate governance setup. Common shareholders can indeed group together wide participations in markets; for example, the firms in BlackRock’s portfolio in the EU Oil&Gas market represent roughly 90% of Total Assets for this market in 2016. Besides, common shareholding has become a lot more common in recent years. For instance, 60% of US public firms in 2014 had common shareholders that
held at least 5% in the firm itself and also in a competitor. This happened only in 10% of cases back in 1980 (He and Huang, 2017). In Europe, we find that common shareholding with at least 5% participation involved 67% of the listed companies in 2016. Although the existence of the phenomenon is widely witnessed across the globe, little evidence is available to date about European markets. JRC.B1, on request of DG COMP, we undertook an extensive analysis of common shareholding in Europe. To the best of our knowledge -
this is the first comprehensive study on this topic in Europe, including not only listed firms but also a series of relevant unlisted corporations in selected industries.
The aspects of common shareholding investigated in this study are:
(A) Measuring common shareholding: analysis of methodological and measurement issues;
(B) Common shareholding indices: derivation of new indicators (and respective properties)
to overcome the criticisms of the current measures of the phenomenon;
(C) Ownership structure of EU listed firms: construction of a database comprising all listed
firms active in EU in 2007-2016, with historical ownership data, industry classification,
legal and financial information;
(D) Identification of industries of interest: construction of ad-hoc lists of firms identifying all
relevant actors active in five specific EU markets during 2007-2016 (Electricity, Oil&Gas,
Mobile Telecoms, Trading Platforms and Beverages);
(E) Common shareholding and common shareholders: picture of the extent and trends of
common shareholding in the last decade for the listed firms active in EU and the five
chosen markets;
(F) Top players: closer look at ownership of top competitors of each industry, and at portfolios
of the largest institutional investors;
(G) Holding thresholds: analysis of level of participation as an expression of effective monitoring
of shareholders on companies; effects of holding thresholds on common shareholding
indicators;
(H) Linking common shareholding and market performance of participated companies: development
of a methodology for testing the link between the level of common shareholding
and firms’ performance, with an application to EU data for the Beverages sector (this
topic is partially develope
ROSATI Nicoletta;
BOMPREZZI Pietro;
FERRARESI Massimiliano;
FRIGO Annalisa;
NARDO Michela;
Rosati, N., Bomprezzi, P., Ferraresi, M., Frigo, A. and Nardo, M., Common Shareholding in Europe, EUR 30312 EN, Publications Office of the European Union, Luxembourg, 2020, ISBN 978-92-76-20876-1, doi:10.2760/734264, JRC121476.
2020-09-28
Publications Office of the European Union
JRC121476
978-92-76-20876-1 (online),
1831-9424 (online),
EUR 30312 EN,
OP KJ-NA-30312-EN-N (online),
https://publications.jrc.ec.europa.eu/repository/handle/JRC121476,
10.2760/734264 (online),
