Prosocial Antitrust
73 UC Hastings L.J. 1555 (2022)
68 Pages Posted: 11 Mar 2021 Last revised: 19 Oct 2024
Date Written: March 11, 2021
Abstract
Antitrust law is at the center of today’s public debate. It has even emerged as a rare unifying force, with bipartisan promises to combat the concentration of economic power. Meanwhile, the business community is grappling with mounting systematic risks arising from climate change, income inequality, and the COVID-19 pandemic. Unexpectedly, the
largest asset managers in the world find themselves on the front lines of these battles. Due to the rise of index investing, these “universal owners” manage portfolios that are so large and diversified, their holdings mirror the entire economy. Their diversification protects them against idiosyncratic risk, but greatly exposes them to systematic risks.
The universal owners are keenly aware of their exposure to these risks. They are turning to their portfolio companies and increasing demands on directors and managers to “serve a social purpose” and reduce their negative externalities. Public-regarding pronouncements from CEOs of Wall Street’s biggest firms ring hollow to many shareholder
primacy loyalists. But the skeptics downplay the economic logic underlying this paradigm shift—diversified shareholders do not want companies to externalize their negative impacts onto the rest of the investors’ portfolios.
Many companies are rising to the challenge and making bold commitments. Some are recognizing that, to overcome pervasive social and environmental challenges, they must collaborate with their competitors. This Article reveals that current antitrust law is a barrier to this collaboration and offers a policy proposal for aligning antitrust law with the
demands upon the prosocial corporation. The COVID-19 pandemic has reminded us that we are all interconnected. Climate change will continue to deepen that understanding. The problems we face are difficult, but they are not insurmountable. To solve them, however, antitrust law must empower more collaboration.
Keywords: Antitrust, Corporate Purpose, ESG, Corporate Governance, Systematic Risk, Corporate Sustainability
JEL Classification: K21, K22
Suggested Citation: Suggested Citation
0 Citations
Do you have a job opening that you would like to promote on SSRN?
- Usage
- Abstract Views: 4748
- Downloads: 1246
- Captures
- Readers: 22
- Exports-Saves: 1
- Mentions
- News Mentions: 2
- Usage
- Abstract Views: 4748
- Downloads: 1246
- Captures
- Readers: 22
- Exports-Saves: 1
- Mentions
- News Mentions: 2