Mergers and Acquisitions under Common Ownershipt

Over the past quarter century, the US economy has seen an increase in employment and revenue concentration across many industries (Grullon, Larkin, and Michaely 2019) and a concentration of corporate equity ownership among a small number of large institutional investors leading to the rise of common ownership (Azar 2012; Backus, Conlon, and Sinkinson 2021). These trends have raised concerns about the role of antitrust enforcement, in particular its effectiveness in dealing with mergers! In this paper we show that mergers increasingly occur between firms that sell similar products to consumers and also share the same set of owners. We further show that the economy-wide effects of mergers on profits, consumer surplus, and total surplus are substantial even when firms are assumed to internalize common ownership concerns before mergers occur.