Joint Ventures and the Justice Department's Antitrust Guide for International Operations

• Author: Joseph F. Brodley
• Published date: 01 June 1979
• Date: 01 June 1979
• DOI: http://doi.org/10.1177/0003603X7902400208
• Subject Matter: Article

The Antitrust Bulletin/Summer 1979

JOINT

VENTURES

AND

THE JUSTICE DEPARTMENT'S

ANTITRUST GUIDE FOR

INTERNATIONAL

OPERATIONS

by

JOSEPH

F. BRODLEY*

Writing in this journal in 1976 I described the law of joint

ventures as "one of

the

darkest corners of

antitrust're-a

situa-

tion caused in no small

part

by the absence of recent

antitrust

precedents. Penetrating the darkness,

the

Antitrust Guide for

International Operations' is a welcome addition to

antitrust

jurisprudence, since almost a

third

of its specific substantive

discussion involves joint ventures. To be sure, the discussion

focuses on joint ventures in international trade, where special

problems exist

not

replicated in domestic markets,"

and

much

of

the

discussion concerns

the

legality of collateral agreements

rather

than

joint ventures as such. Nevertheless, the analysis

of joint ventures

has

relevance not confined to international

markets or embedded collateral agreements, and hence what

the Antitrust Guide

has

to say provides added illumination in

adifficult area.' Moreover, since

the

Antitrust Guide is a

*Professor of Law,

Indiana

University (Bloomington).

1Brodley, The Legal Status of Joint Ventures Under the An-

titrust Laws: A Summary Assessment, 21

ANTITRUST

BULL.

453

(1976) (hereafter cited as Brodley, Joint Ventures).

2

ANTITRUST

DIVISION

U.S.

DEPART.

OF

JUSTICE,

ANTITRUST

GUIDE

FOR

INTERNATIONAL

OPERATIONS

(1977) (hereafter

referred

to as Antitrust

Guide), reprinted in

TRADE

REG.

REP.

(CCH) No. 266, Pt. II (1977).

(Citations

are

to

the

CCH reprint.)

3E.g.,

antitrust

jurisdiction over foreign commerce, comity, Act

of

State

doctrine, Webb-Pomerene

Act

and

international

agree-

ments

between governments.

4This

has

been made explicit by a policy spokesman for

the

Anti-

trust

Division, who

states

that

much of

the

legal analysis, including

that

directly applicable to

at

least

two of

the

specific cases discussed

(Cases C

and

D), is "essentially identical to

that

which would apply

©1979 by

Federal

Legal Publications, Inc.

337

338 THE ANTITRUST BULLETIN

statement of enforcement policy,

it

can be useful in assessing

the

outer boundaries of possible governmental challenge, for

surely a joint venture which is questionable in

the

possibly

less hostile environment of international trade would be

at

least equally suspect if it occurred solely in domestic markets.

In my previous article on joint ventures I concluded

that

the classification of a joint venture with respect to the

parents' market, as horizontal, vertical or conglomerate, was

of explanatory importance. More specifically, as between

parents with high market shares who are competitors or

potential competitors in concentrated

markets-(1)

a horizon-

tal joint venture was inevitably suspect; (2) a market exten-

sion joint venture organized on a permanent basis was equally

suspect where

the

parents together held a dominant market

position; (3) a vertical joint venture involving the marketing of

aproduct produced by both parents was also questionable

(although the legal authority for this conclusion was sparse);

and (4) a pure conglomerate or pure product extension joint

venture was unlikely to raise antitrust problems under ex-

isting precedents." As between high market share parents, this

left as the areas of greatest legal doubt (1) limited term

market extensions; (2) market extensions as to one parent

only; and (3) upstream vertical joint ventures." Strikingly,

it

is

precisely on these areas

that

the Antitrust Guide focuses.

in a domestic

antitrust

case." Donald A. Farmer,

Jr.,

remarks before

a seminar sponsored by the Council of the Americas in Cleveland,

Ohio (June 8, 1977), reprinted in 5TRADE REG. REP.

(CCH)

'50,325,

at 55,689. See also Ky P. Ewing,

Jr.,

Antitrust Enforcement: A

Positive Force for Innovation, remarks before Institute of Electrical

and Electronic Engineers, at Arlington, Virginia (Sept. 20, 1978) at

pp.8-9.

5Brodley, Joint Ventures, supra note 1, at 456-472.

6Id. at 467-468; 477-478.