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Abstract: This paper analyzes the relationship between common ownership – when two firms are partially held by the same investor – and markups. Combining firm-level financial data from Europe with ownership data of publicly listed firms, we structurally estimate production functions and markups, as a measure for market power. We find a robust positive relationship between firms' common ownership measures and their markups. A standard deviation increase in the level of common ownership with firms in the same industry is associated with an increase of 2-3% in firm markups. We further find that, if anything, the relation between common ownership and productivity is negative. Our results hint at common ownership increasing market power.