2000 Department of Justice and Federal Trade Commission Antitrust Guidelines for Collaborations Among Competitors

• Pages: 123-163

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2000 DEPARTMENT OF JUSTICE AND FEDERAL

TRADE COMMISSION ANTITRUST GUIDELINES

FOR COLLABORATIONS AMONG COMPETITORS

Preamble

In order to compete in modern markets, competitors sometimes need

to collaborate. Competitive forces are driving firms toward complex

collaborations to achieve goals such as expanding into foreign markets,

funding expensive innovation efforts, and lowering production and other

costs.

Such collaborations often are not only benign but procompetitive.

Indeed, in the last two decades, the federal antitrust agencies have

brought relatively few civil cases against competitor collaborations.

Nevertheless, a perception that antitrust laws are skeptical about

agreements among actual or potential competitors may deter the

development of procompetitive collaborations.1

To provide guidance to business people, the Federal Trade

Commission (“FTC”) and the U.S. Department of Justice (“DOJ”)

(collectively, “the Agencies”) previously issued guidelines addressing

several special circumstances in which antitrust issues related to

competitor collaborations may arise.2 But none of these Guidelines

represents a general statement of the Agencies’ analytical approach to

1. Congress has protected certain collaborations from full antitrust liability by

passing the National Cooperative Research Act of 1984 (“NCRA”) and the

National Cooperative Research and Production Act of 1993 (“NCRPA”)

(codified together at 15 U.S.C. §§ 4301-06).

2. The Statements of Antitrust Enforcement Policy in Health Care (“Health

Care Statements”) outline the Agencies’ approach to certain health care

collaborations, among other things. The Antitrust Guidelines for the

Licensing of Intellectual Property (“Intellectual Property Guidelines”)

outline the Agencies’ enforcement policy with respect to intellectual

property licensing agreements among competitors, among other things.

The 1992 DOJ/FTC Horizontal Merger Guidelines, as amended in 1997

(“Horizontal Merger Guidelines”), outline the Agencies’ approach to

horizontal mergers and acquisitions, and certain competitor collaborations.

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competitor collaborations. The increasing varieties and use of

competitor collaborations have yielded requests for improved clarity

regarding their treatment under the antitrust laws.

The new Antitrust Guidelines for Collaborations among Competitors

(“Competitor Collaboration Guidelines”) are intended to explain how the

Agencies analyze certain antitrust issues raised by collaborations among

competitors. Competitor collaborations and the market circumstances

in which they operate vary widely. No set of guidelines can provide

specific answers to every antitrust question that might arise from a

competitor collaboration. These Guidelines describe an analytical

framework to assist businesses in assessing the likelihood of an antitrust

challenge to a collaboration with one or more competitors. They should

enable businesses to evaluate proposed transactions with greater

understanding of possible antitrust implications, thus encouraging

procompetitive collaborations, deterring collaborations likely to harm

competition and consumers, and facilitating the Agencies’ investigations

of collaborations.

Section 1: Purpose, Definitions, and Overview

1.1 Purpose and Definitions

These Guidelines state the antitrust enforcement policy of the

Agencies with respect to competitor collaborations. By stating their

general policy, the Agencies hope to assist businesses in assessing

whether the Agencies will challenge a competitor collaboration or any of

the agreements of which it is comprised.3 However, these Guidelines

cannot remove judgment and discretion in antitrust law enforcement.

The Agencies evaluate each case in light of its own facts and apply the

analytical framework set forth in these Guidelines reasonably and

flexibly.4

A “competitor collaboration” comprises a set of one or more

agreements, other than merger agreements, between or among

competitors to engage in economic activity, and the economic activity

3. These Guidelines neither describe how the Agencies litigate cases nor

assign burdens of proof or production.

4. The analytical framework set forth in these Guidelines is consistent with

the analytical frameworks in the Health Care Statements and the

Intellectual Property Guidelines, which remain in effect to address issues

in their special contexts.

COMPETITOR COLLABORATION GUIDELINES 125

resulting therefrom.5 “Competitors” encompasses both actual and

potential competitors.6 Competitor collaborations involve one or more

business activities, such as research and development (“R&D”),

production, marketing, distribution, sales or purchasing. Information

sharing and various trade association activities also may take place

through competitor collaborations.

These Guidelines take into account neither the possible effects of

competitor collaborations in foreclosing or limiting competition by rivals

not participating in a collaboration nor the possible anticompetitive

effects of standard setting in the context of competitor collaborations.

Nevertheless, these effects may be of concern to the Agencies and may

prompt enforcement actions.

1.2 Overview of Analytical Framework

Two types of analysis are used by the Supreme Court to determine

the lawfulness of an agreement among competitors: per se and rule of

reason.7 Certain types of agreements are so likely to harm competition

and to have no significant procompetitive benefit that they do not

warrant the time and expense required for particularized inquiry into

their effects. Once identified, such agreements are challenged as per se

unlawful.8 All other agreements are evaluated under the rule of reason,

5. These Guidelines use the terms “anticompetitive harm,” “procompetitive

benefit,” and “overall competitive effect” in analyzing the competitive

effects of agreements among competitors. All of these terms include actual

and likely competitive effects. The Guidelines use the term

“anticompetitive harm” to refer to an agreement’s adverse competitive

consequences, without taking account of offsetting procompetitive

benefits. Conversely, the term “procompetitive benefit” refers to an

agreement’s favorable competitive consequences, without taking account

of its anticompetitive harm. The terms “overall competitive effect” or

“competitive effect” are used in discussing the combination of an

agreement’s anticompetitive harm and procompetitive benefit.

6. Firms also may be in a buyer-seller or other relationship, but that does not

eliminate the need to examine the competitor relationship, if present. A

firm is treated as a potential competitor if there is evidence that entry by

that firm is reasonably probable in the absence of the relevant agreement,

or that competitively significant decisions by actual competitors are

constrained by concerns that anticompetitive conduct likely would induce

the firm to enter.

7. See National Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 692

(1978).

8. See FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 432-36

(1990).