Chapter II. Joint Ventures: What and Why

• Pages: 5-18

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CHAPTER II

JOINT VENTURES: WHAT AND WHY

“[G]lobal and innovation-based competition [continues] driving

firms toward ever more complex collaborative agreements.”

1

Firms enter

into joint ventures for a multitude of procompetitive reasons, such as to

lower costs, obtain economies of scale, increase production capacity,

pool research and development resources, commercialize new products,

and facilitate entry into new markets.

2

Of course, firms may enter into

joint ventures for anticompetitive reasons as well. Among other things, a

joint venture could be a ruse for a price-fixing conspiracy, curtail compe-

tition between significant competitors, facilitate collusion between the

parents, or control a third-party rival’s supply of a needed input.

3

In addi-

tion, some joint ventures, although established for lawful purposes and

1

. Comments and Hearings on Joint Venture Project, 62 Fed. Reg. 22,945,

22,946 (Apr. 28, 1997) [hereinafter Pr oject Hearings].

2

. See, e.g., id.; U.S. DEP’T OF JUS TICE & FEDERAL TRADE COMM’N,

ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG COMPETITORS,

(2000), r eprinted in 4 Trade Reg. Rep. ( CCH) ¶ 13,161 Preamble, avail-

able a t http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf [hereina fter

Competitor Collabor ation Guidelines].

3

. Cf. Charles A. James, Recent Developments and F uture Challenges at the

Antitrust Division, Address Before the Dallas Bar Ass’n (S ept. 17, 2002)

(“[W]e also have launched a number of important joint-venture investiga-

tions invol ving, among other pro ducts, on-line media, financial services

and elec tronic air passenger ticketing. Joint ventures are a high priority

for the Division, in part because we believe t hat many films are turning to

joint ventures as an alternative to mergers, and in part because joint ven-

tures are an important way in which competitors interact with each other

in emerging markets.”), a vailable a t http://www.justice.gov/

atr/public/speeches/200239.htm.