Horizontal shareholding among fintech firms in Asia: A preliminary competition law assessment

Abstract

This chapter introduces the problem of horizontal shareholding in the fintech sector in Asia. A great deal of the fintech debate surrounds Grab and Go-Jek, two ridesharing platforms that are aggressively expanding their business geographically and product-wise. To finance the expansion, these firms rely on various investors. These investors do often not limit their interest in these two firms but also become shareholders in firms offering the same products. This form of shareholding, also known as horizontal shareholding, is increasingly characterizing the fintech scene in Asia. This triggers the question on how this phenomenon should be approached from a competition law perspective. Horizontal shareholding indeed facilitates the flow of information between competitors or enables control over the executives of competing firms. The issue is still controversial as there is disagreement on the effects of horizontal shareholding and on how competition law should be applied to the issue. However, there is an understanding that further research is warranted. Part of this research, this chapter argues, should not be on direct price increase due to horizontal shareholding. The international character of the horizontal shareholding in the Asian fintech sector requires a rethinking of the possible anticompetitive effects. This chapter claims that such an effect may be market division. Enforcement may be a difficult issue. However, when a merger occurs in this sector, enforcement authorities should pay close attention to the issue of horizontal shareholding.