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Article: The anticompetitive effect of passive investment.
- Article from:
- Michigan Law Review
- Article date:
- October 1, 2000
- Author:
CopyrightCOPYRIGHT 2000 Michigan Law Review Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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INTRODUCTION
There are many cases in which a firm passively invests in its competitor.(1) For example, Microsoft passively invested in $150 million worth of the nonvoting stock of Apple, its historic rival in the operating systems market.(2) Also, in November 1998, Northwest Airlines, the nation's fourth-largest airline, purchased 14%(3) of the common stock of Continental Airlines Inc., the nation's fifth-largest (and fastest growing) airline.(4) Northwest competes with Continental on seven routes, serving 3.6 million passengers per year.(5) In another example, TCI, the nation's largest cable operator, became a passive investor with a 9% stake (which can be ...