Joint Ventures
| Author | Ronan P. Harty |
| Pages | 465-522 |
465
CHAPTER 4
JOINT VENTURES
A. Introduction
The joint venture is “an important and increasingly popular form of business
organization.”1 The term “joint venture” does not have a single, precise meaning under
the antitrust laws.2 In its broadest sense, the term embraces any collaborative activity,
usually short of a full merger (although, as discussed below, its competitive effects
may be assessed like those of a merger), by which separate firms pool resources to
develop, produce or sell a product or service, to obtain needed inputs or to pursue some
other objective.3 To the extent that such activities involve actual or potential
competitors, joint ventures may also be referred to as “competitor collaborations.”4
Joint ventures and competitor collaborations can range from a loose contractual
arrangement to a virtually complete integration of the parents’ resources in a particular
line of business that is functionally equivalent to a full merger (in which case the
venture’s competitive effect will be assessed in essentially the same manner as a
merger of the parties). Joint ventures often entail the creation of a new economic entity,
owned and controlled by the parties forming the joint venture,5 but this is not essential;
1. Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006).
2. See, e.g., Tower Air, Inc. v. Federal Exp. Corp., 956 F. Supp. 270, 285 n.2 (E.D.N.Y. 1996) (“Joint
ventures present a difficult concept for antitrust analysis, defying neat classification and precise
definition and, by extension, well-established rules for evaluating their competitive impact.” (citation
omitted)).
3. See, e.g., SCFC ILC, Inc. v. Visa U.S.A., Inc., 36 F.3d 958, 963 (10th Cir. 1994) (joint venture exists
where “competitive incentives between independent firms are intentionally restrained and their
functions and operations integrated to achieve efficiencies and increase output”); U.S. DEP’T OF
JUSTICE & FED. TRADE COMM’N, ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG
COMPETITORS (2000) [hereinafter COMPETITOR COLLABORATIONS GUIDELINES], a vailable at
http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf (defining competitor collaborations as 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”).
4. See COMPETITOR COLLABORATIONS GUIDELINES, supra note 3.
5. Dagher, 547 U.S. at 3-4 (two competing oil companies created “economically integrated joint
venture” by agreeing to consolidate certain operations and “pool their resources and share the risks
of and profits from [the venture’s] activities”); SCFC ILC, Inc., 36 F.3d at 963 (“Although virtually
any collaborative activity among business firms may be called a joint venture, joint ventures differ
from mergers and cartels ‘by the extent to which they integrate the resources of their partners. . . . In
a joint venture, partners contribute assets, such as, capital, technology, or production facilities to a
common endeavor. This integration of resources creates economic efficiencies that cannot be
achieved by naked agreements among competitors.’” (citation omitted)).
466 ANTITRUST LAW DEVELOPMENTS (NINTH)
the pooling of resources and associated risk sharing may be accomplished by
agreement without a new entity being created.6
As with any agreement among otherwise independent firms, joint ventures can have
a wide range of competitive effects and are therefore subject to scrutiny under the
antitrust laws.7 Joint ventures can create additional productive capacity through the
formation of a new operating unit, engage in research and development (R&D) for a
new product or technology, lower costs through economies of scale and scope, achieve
synergies from the pooling of complementary resources, facilitate entry into new
markets, and share or diversify risk.8 But joint ventures also may provide a venue for
collusion among the venture parents, facilitate anticompetitive coordination among the
venture parents and third parties, create or enhance market power of the venture or its
parents, foreclose competitors from access to a competitively advantageous resource,
or eliminate potential competition.9
6. See, e.g., National Bancard Corp. v. Visa U.S.A., Inc., 596 F. Supp. 1231, 1253 (S.D. Fla. 1984)
(“[T]here is no requirement . . . that a joint venture integrate or share costs in some prescribed
[way].”), aff’d, 779 F.2d 592 (11th Cir. 1986).
7. See NCAA v. Alston, 141 S. Ct. 2141, 2155 (2021) (“The fact that joint ventures can have such
procompetitive benefits surely stands as a caution against condemning their arrangements too
reflexively. . . . But even assuming (without deciding) that the NCAA is a joint venture, that does
not guarantee the foreshortened review it seeks.” (citations omitted)); American Needle, Inc. v. NFL,
560 U.S. 183, 199 (2010) (“‘[J]oint ventures have no immunity from antitrust laws’”) (alteration in
original) (quoting NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 113 (1984)); see also
id. at 196 (“Because the inquiry is one of competitive reality, it is not determinative . . . that two
legally distinct entities have organized themselves under a single umbrella or into a structured joint
venture.”); id. at 199 (joint operations and need to cooperate do not provide immunity from § 1
analysis); see also North Carolina State Bd. of Dental Exam’rs v. FTC, 717 F.3d 359, 372 (4th Cir.
2013) (rejecting the argument that a state dental board, despite being a single entity, could not
conspire under § 1 because “competitors cannot simply get around antitrust liability by acting
through a third-party intermediary or joint venture” (quoting American Needle, 560 U.S. at 202)),
aff’d on other grounds, 135 S. Ct. 1101 (2015).
8. See COMPETITOR COLLABORATIONS GUIDELINES, supra note 3, § 2.1 (recognizing potential
procompetitive benefits of joint ventures); see also Northwest Wholesale Stationers v. Pac.
Stationery & Printing Co., 472 U.S. 284, 295 (1985) (joint purchasing arrangement “permits the
participating retailers to achieve economies of scale in both the purchase and warehousing of
wholesale supplies”); SCFC ILC, Inc., 36 F.3d at 963 (“efficiencies created by joint ventures are
similar to those resulting from mergers—risk-sharing, economies of scale, access to complementary
resources and the elimination of duplication and waste”); MLB Props. v. Salvino, Inc., 542 F.3d 290,
337 (2d Cir. 2008) (Sotomayor, J. concurring) (joint venture offered “substantial efficiency-
enhancing benefits that the [participants] could not offer on their own, including decreased
transaction costs on the sale of licenses, lower enforcement and monitoring costs, and the ability to
one-stop shop”); Boeing Co., 71 Fed. Reg. 60,148, 60,149 (F.T.C. Oct. 12, 2006) (approving Boeing-
Lockheed launch services joint venture in light of strong support of only customer, the Department
of Defense); U.S. DEP’T OF JUSTICE & FED. TRADE COMM’N, JOINT ANTITRUST GUIDELINES
REGARDING COVID-19 (2020) [hereinafter COVID-19 ANTITRUST GUIDELINES], available at
https://www.justice.gov/atr/joint-antitrust-statement-regarding-covid-19 (“[J]oint ventures may be
necessary for businesses to bring goods to communities in need, to expand existing capacity, or to
develop new products or services . . . .”); Warner Commc’ns, 132 F.T.C. 622, 636 (2001) (aid to
public comment) (“joint ventures can enable companies to expand into foreign markets, fund
expensive innovation and research efforts, and lower costs to the benefit of industry and consumers
alike”) (concurring statement of Commissioner Thompson).
9. See COMPETITOR COLLABORATIONS GUIDELINES, supra note 3, § 2.2 (outlining potential
anticompetitive harms of joint ventures); see also Citizen Publ’g Co. v. United States, 394 U.S. 131
(1969) (joint venture gave participants monopoly power in relevant market); United States v. Penn-
Olin Chem. Co., 378 U.S. 158 (1964) (joint venture unlawful because of lessening of potential
competition); Timken Roller Bearing Co. v. United States, 341 U.S. 593 (1951) (agreement styled
JOINT VENTURES 467
Part B of this chapter examines the legal standards applicable to joint ventures
generally. Part C analyzes how those standards apply to particular types of joint
ventures. Part D considers the line between joint ventures and single actors. Part E
examines the legal standards applicable to pricing and output decisions of a joint
venture and to any collateral restraints among joint venture participants. Part F
addresses third-party access to joint ventures and their facilities.
B. Legal Standards Applicable to Joint Ventures
Joint ventures, as with other agreements among otherwise independent firms, are
subject to review under Sections 1 and 2 of the Sherman Act,10 and under Section 5 of
the Federal Trade Commission Act (FTC Act).11 Additionally, the formation of a joint
venture through the creation of a new entity is subject to Section 7 of the Clayton Act
where the parties acquire voting securities in that entity.12 The formation of a joint
venture may also be subject to the premerger notification requirements of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).13 Joint ventures
involving research or joint production may benefit from guaranteed rule of reason
treatment under the National Cooperative Research and Production Act (NCRPA) of
1993.14
as joint venture found to be a per se unlawful naked agreement to divide territories and fix pri ces),
overruled in part on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752
association unlawfully denied access to competing newspapers); Robertson v. Sea Pines Real Estate
harms’ alongside the ‘competitive advantages’” of real estate joint venture) (quoting United States
F. Supp. 3d 865, 919-20 (E.D. Mo. 2020) (enjoining proposed joint venture that would have
enhanced the market power of its parents).
10. 15 U.S.C. §§ 1-2. See, e.g., American Needle, 560 U.S. at 191-92 (noting that a joint venture is
subject to § 1 liability when the entity “serve[s], in essence, as a vehicle for ongoing concerted
activity”); Robertson , 679 F.3d at 285, 290 (analyzing a real estate joint venture under § 1); Agnew
v. NCAA, 683 F.3d 328, 332, 338 (7th Cir. 2012) (analyzing bylaws of the NCAA under § 1);
Addamax Corp. v. Open Software Found., 152 F.3d 48, 51-52 (1st Cir. 1998) (analyzing joint
venture under § 1). Section 2 of the Sherman Act is applicable if the formation or operation of the
venture allegedly represents an unlawful monopolization of or attempt to monopolize any part of
trade or commerce. See, e.g., United States v. Pan Am. World Airways, 193 F. Supp. 18, 36
(S.D.N.Y. 1961) (unilateral suppression by one joint venture parent of growth of 50 percent owned
subsidiary into fields occupied by such parent constitutes § 2 violation), rev’d on other grounds, 371
U.S. 296 (1963).
11. 15 U.S.C. § 45. See, e.g., Yamaha Motor Co. v. FTC, 657 F.2d 971 (8th Cir. 1981) (joint venture
agreement proscribing one venture partner from marketing non-joint venture products anywhere but
in Japan violated § 5). Section 5 of the FTC Act is a general prohibition against unfair methods of
competition. It includes, but is not limited to, the specific acts and practices condemned by the
Sherman and Clayton Acts. The scope of § 5 is discussed in Chapter 8.A.3.
12. Penn-Olin Chem. Co., 378 U.S. at 170.
13. 15 U.S.C. § 18a; 16 C.F.R. §§ 801.40, 801.50 (governing reportability of joint ventures formed as a
corporation). For more detailed information on premerger notification thresholds see Chapter 3, part
D; ABA SECTION OF ANTITRUST LAW, THE MERGER REVIEW PROCESS 176-84 (4th ed. 2012).
14. 15 U.S.C. §§ 4301-4306.
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