A century ago, J.P. Morgan made a fortune by buying up shares of competing railroad companies with other people’s money. He used cash from savers and financiers to buy shares in competitors. Then Morgan forced those competitors to cooperate. Similarly, Gilded Age “voting trusts” pooled money from individuals to buy shares in competing companies. Then the trusts used shareholder voting rights to restrict competition

These schemes handed their investors huge profits. Yet the unfortunate side effect of uncompetitive markets is that consumers pay higher prices. Given limited budgets, they buy fewer things. Macroeconomic output drops; people become unemployed; and political unrest ensues.

Could something similar to these 19th Century voting trusts be happening today? New research from my coauthors and me suggests that the answer is yes – and that your retirement savings are part of the problem.

Take a look at this table.

Basically, a handful of asset management firms have become the most powerful shareholders of the nation’s largest banks. These mutual fund companies collect cash from retirement savers like you and me. They buy shares with it on our behalf, and vote these shares, usually with one voice. In these key aspects, large mutual fund firms resemble the voting trusts of J.P. Morgan’s time.

And yes, large-scale common ownership nowadays also appears to thwart competition.

In “Ultimate Ownership and Bank Competition,” José Azar, Sahil Raina, and I looked at banks across different parts of the United States. We observed a big difference in competitive outcomes between counties where banks are more commonly owned by the same set of investors and counties where they’re not. In counties where common ownership increases, banks raise fees for deposit accounts and lower savings interest rates.

Today’s large-scale common ownership is probably not a deliberate action by a lone capitalist out to throttle competition. It may be more of an accident. Partly due to the decline of corporate pension plans, mutual funds have grown widely popular and commonplace. Index funds have given millions of people relatively low-cost access to the stock market.

This collective flood of individual investment has turned asset management companies into ginormous shareholders. BlackRock alone manages about $4.7 trillion in assets. That makes it the largest shareholder of more than one fifth of all American firms. When BlackRock is not a public firm’s largest shareholder, it is most likely among the top five. Vanguard, State Street, Fidelity, T. Rowe Price, and Wellington are a bit smaller, but they’re still huge. In aggregate, the top mutual fund companies often control more than 25% of a public company’s stock.

These developments in the retirement system change who is in control of Corporate America. While many of these mutual funds follow passive investment strategies, “nothing could be further from the truth” than inferring that they are also passive owners, says Vanguard’s CEO. Indeed, the asset management firms engage with hundreds of companies each year to discuss matters of strategic importance, including product market strategies. For example, just a few months ago, Fidelity, T. Rowe Price, and Wellington reportedly told Pharma portfolio firms to “defend drug pricing” amid political pressure to do the opposite. BlackRock CEO Larry Fink advises Deutsche Bank on which markets he thinks they should or should not compete in (BlackRock is the bank’s largest shareholder).

Banking is not the only industry in which common ownership causes higher prices.

In “Anti-Competitive Effects of Common Ownership,” José Azar, Isabel Tecu and I show that airfare on a given route goes up when competing airlines serving that route become more commonly owned by the same investors. To distinguish correlation from causation, we use BlackRock’s 2009 acquisition of Barclays Global Investors (BGI). That merger led to a significant increase in common ownership between some airlines but not others. Ticket prices subsequently increased on the routes served by the more affected airlines. We estimate that airline ticket prices are up to 10% higher because of common ownership.

Does the finding of anticompetitive effects in a couple of industries mean that we should ring alarm bells across the economy? We’d love to have more research to know with confidence whether the same patterns show up in all other parts of the economy. However, wait-and-see might not be optimal given how pervasive common ownership has become in so many other industries, and given the continued growth of the largest diversified institutions.

After all, we can already see predictable consequences of increased monopoly power and reduced competition: a long streak of record corporate profits amid low investment and slow growth, low real interest rates, and low business dynamism. Nobel Laureate Joseph Stiglitz says these patterns cannot be explained with a competitive model of the economy. Goldman Sachs finds itself in need to “fundamentally question how capitalism is working.” Larry Summers finds that “only the monopoly-power story can convincingly account” for these patterns.

To restore competition, regulators have several options.

Reduce the size of the large, diversified asset management firms. Existing antitrust rules are likely sufficient to prevent or at least challenge mega-mergers between large, diversified asset managers that threaten competition, such as the BlackRock-BGI acquisition. A prominent legal scholar says all that’s required is “the will to bring cases.”

Limit the power of large mutual fund companies. Another approach is to enforce existing regulation that requires a fund to notify antitrust authorities when it buys significant stakes in natural competitors with any intention to influence management. Recently, authorities have taken on hedge funds, alleging they violated this regulation. Now mutual funds are on alert, because they “routinely discuss” topics with portfolio firms much like hedge funds have done. But if regulators weaken the largest shareholders’ control rights, how can those investors exercise strong corporate governance? When nobody monitors executives anymore, what have we gained overall?

Strengthen the clout of activist investors. Existing research shows that nondiversified owners, such as activist hedge funds, incentivize CEOs to compete more vigorously. (Activist funds typically hold only one company in an industry.) But that may not come about when much larger, diversified investors that own the entire industry prevent activism in the first place. They can simply vote against the hedge fund asking for more competition. Perhaps regulators can at least slow that development by questioning the diversified mutual funds’ practice to coordinate their governance strategies against activists. Of course, any downsides of hedge fund activism would be exacerbated by this measure.

Besides monitoring corporate governance, mutual funds provide unprecedentedly cheap access to diversified investment in the stock market. Even though only half of the population enjoys that benefit, and those gains are unequally distributed, reining in asset managers could crimp this integral system of investments and retirement savings for millions of people.

Much like in the case of conventional monopolies, the tradeoff here is between the benefits the current system provides to shareholders versus the adverse consequences it has for competition – the backbone of the U.S. economy and society.

Back in the 19th Century, the anticompetitive effects of “Morganization” and voting trusts inspired the bipartisan effort to write the first antitrust laws and to found the Federal Trade Commission. Given that similar anticompetitive outcomes are present in today’s economy, the rise of common ownership is a troubling fact that economists and regulators should spend much more time thinking about.