Appendix N. Antitrust Guidelines for Collaborations Among Competitors

• Pages: 787-830

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APPENDIX N

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

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). Relatively few

participants in research and production collaborations have sought to take

advantage of the protections afforded by the NCRA and NCRPA,

however.

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.

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represents a general statement of the Agencies’ analytical approach to

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

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.”

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

assign burdens of proof or production.

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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

resulting therefrom.5 “Competitors” include firms that are actual or

potential competitors6 in a relevant market.7 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 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.

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.

5.These Guidelines do not address the possible exclusionary effects of

agreements among competitors that may foreclose or limit competition by

rivals.

6.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.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.