Joint Ventures And Joint Action By Competitors

• Pages: 143-165

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CHAPTER VIII

JOINT VENTURES AND JOINT ACTION BY

COMPETITORS

A. Joint Ventures

Joint ventures are common in the electric utility industry. In the

current regulated environment, electric utilities use joint ventures to

share the risks of generation and transmission. In fact, many facilities

exist only because utilities have combined to construct them large

enough that they operate economically. Power pool arrangements, which

are designed to ensure the ready availability of energy for members of

the pool, are elaborate joint ventures. Utilities also band together to

purchase coal, equipment, and other supplies at rates available only to

large purchasers.

In a deregulated environment, utilities are likely to use even more

joint ventures to offer new services and to expand geographically to

serve national accounts. Utilities will need to provide electrical services

to national customers in territories in which these utilities previously did

not operate. They also may offer services or packages of services to

differentiate themselves from competitors. Joint ventures among utilities

and others also might offer services and products that can only be offered

efficiently through networks or joint enterprises. Finally, vertically

integrated electrical utilities might contribute their transmission assets to

ISOs, which also likely would be analyzed as joint ventures.

1. The FTC/DOJ Competitor Collaboration Guidelines

On April 7, 2000, the FTC and the DOJ jointly issued the final

version of their Antitrust Guidelines for Collaborations Among

Competitors.519 The preamble to the Competitor Collaboration

Guidelines describes today’s business environment as one in which

competitors often need to collaborate in order to compete effectively in

modern markets: “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

519. 4 Trade Reg. Rep. (CCH) ¶ 13,161 (Apr. 7, 2000).

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costs.”520 As a result of the increase in competitor collaborations, the

agencies issued the Competitor Collaboration Guidelines to aid

businesses in understanding how the agencies will analyze certain

cooperative agreements. The agencies acknowledge, however, that “[n]o

set of guidelines can provide specific answers to every antitrust question

that might arise from a competitor collaboration.”521

The Competitor Collaboration Guidelines specifically differentiate

competitor collaborations from mergers by defining a collaboration 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.”522 Even though the Competitor

Collaboration Guidelines make clear that their focus is not on mergers,

the guidelines should not be viewed as totally independent from the

agencies’ other published guidelines and policy statements that relate to

agreements among competitors.523 The Competitor Collaboration

Guidelines’ approach is consistent with those reflected in other

guidelines and policy statements issued by the agencies, which remain in

effect. As a whole, the guidelines and policy statements issued by the

agencies are complementary and the Competitor Collaboration

Guidelines often cross-reference and incorporate them. For example,

although the agencies analyze competitor collaborations differently than

mergers, the Competitor Collaboration Guidelines state that under

certain circumstances, the agencies will treat a competitor collaboration

as analogous to a merger and will examine it under the Horizontal

Merger Guidelines.524

520. Id. at 20,851.

521. Id. at 20,852.

522. Id. § 1.1, at 20,852.

523. See, e.g., HORIZONTAL MERGER GUIDELINES, 4 Trade Reg. Rep. (CCH) ¶

13,104 (Apr. 8, 1997); STATEMENTS OF ANTITRUST ENFORCEMENT

POLICY IN HEALTH CARE, 4 Trade Reg. Rep. (CCH) ¶ 13,153 (Aug. 28,

1996); ANTITRUST GUIDELINES FOR THE LICENSING OF INTELLECTUAL

PROPERTY, 4 Trade Reg. Rep. (CCH) ¶ 13,132 (Apr. 6, 1995).

524. See COMPETITOR COLLABORATION GUIDELINES § 1.3, 4 Trade Reg. Rep.

(CCH) ¶ 13,161, at 20,854.