Gaining ‘influence’ Through Financial Structure
Abstract: Antitrust law recognizes that an important stakeholder might be able to exercise influence over another party “by voting or otherwise.” My focus is on “otherwise” – specifically, can one party gain influence over another party through a (possibly) non-voting debt-like or equity-like financial stake? Ultimately, can two competing entities use such stakes to commit to each other to not compete? There is some case law that is consistent with the intuitively appealing suggestion that even the holder of a large non-voting stake (debt or equity) could exercise influence over a target firm. I develop this intuition and explore its limits by appealing to both the case law and to the governance attributes of alternative modes of financing.