[Glyptodon]

Even without index funds the drive towards large portfolios and diversification would do the same thing. I'd go so far as to say that unified ownership of competing firms by large investors is just unhealthy in general. Not really sure what can be done about it though since many companies are rather multi-industry.

[fipple]

Well the idea of an index, whether done through a fund or not, is to buy some of each company. A value investing approach would be to find the better stock and invest in it, so Coke stockholders would rarely own Pepsi stock and vice versa.

[Glyptodon]

Still, even without index funds, the first thing most people are told is that diversification is key and that sector allocation matters more than the specific companies you hold. Plus people want to mitigate risk, so they buy a little of each thing that matches whatever profile, and soon a sector essentially has unified ownership interests rather than competitive (and antagonistic) ownership interests.

[guelo]

If all the companies in an industry are owned by the same entity couldn't they be considered one company and then monopoly regulations would apply?