By: Mariana Pargendler, Maria Luiza Mesquita & Lucas Víspico (Pro Market)
Competition regulators have historically directed their attention towards equity connections manifested through stock ownership and control as the defining parameters of a company concerning antitrust investigations. Our recent research document illustrates how competition authorities in several regions within the Global South, including Argentina, Brazil, Indonesia, and Turkey, have consistently turned to familial connections when delineating a business entity (or enterprise) during the course of regulatory actions.
Familial ownership stands as the predominant model of corporate ownership globally, particularly in emerging economies. Family-run enterprises often exhibit distinct operational behaviors in comparison to other business types. An ongoing study has unveiled that family-owned businesses in Italy encounter fewer instances of antitrust oversight. Family ownership demonstrates its efficacy in mitigating institutional deficiencies inherent in developing nations, such as inadequate contract enforcement and failures within capital markets. Simultaneously, family control could potentially facilitate corporate misconduct. A recently published working paper by Pablo Balán, Juan Dodyk, and Ignacio Puente from the Stigler Center proposes that familial connections might be employed to amplify corporate influence and navigate around regulations. The authors put forth evidence indicating that in response to a recent prohibition on corporate political contributions, individual members of controlling families in Brazilian companies have substituted corporate donations with personal ones.
Competition watchdogs in the Global South have acknowledged the economic significance of family bonds and their capacity to undermine the efficacy of antitrust legislation. These agencies have leaned on familial relationships as legal links to associate separate legal entities controlled by different members of the same family, especially during investigations into mergers and anticompetitive agreements…