The Investment Company Institute ("ICI") urged the Federal Trade Commission ("FTC") and other authorities not to restrict common ownership in competing companies by institutional investors or remove the shareholder rights of the clients of investment advisers who manage such investments.
In a comment letter to the FTC on upcoming " hearings on competition and consumer protection in the 21st century," the ICI voiced strong opposition to regulatory initiatives that may be based on "academic papers that allege common ownership by institutional investors decreases competition and raises consumer prices in concentrated industries, even when all common holdings are small (in percentage terms) and the institutional investor controls none of the commonly held firms (the "common ownership hypothesis")."
The ICI described the common ownership hypothesis as based upon (i) "misunderstandings and misinformation about the asset management industry," (ii) "incorrect assumptions about the incentives of advisers and their clients" and (iii) "flawed empirical work."
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