Multinational Joint Ventures

• Pages: 171-218

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CHAPTER IX

MULTINATIONAL JOINT VENTURES

A. General Overview of Antitrust Analysis by Foreign Jurisdictions

In an increasingly integrated global economy, multinational joint

ventures are becoming more common. Further, as more jurisdictions

develop robust antitrust enforcement efforts, more care is necessary to

consider how different jurisdictions will assess a multinational joint

venture. The ultimate success of a multinational joint venture may

depend on whether counsel can identify antitrust issues in relevant

jurisdictions and address them effectively and efficiently so as to

withstand antitrust challenges.

As discussed in more detail in Chapter VI, antitrust enforcement

agencies typically evaluate joint ventures through the rubric of either

(1) merger control or (2) agreements in restraint of trade. While

similarities may exist, jurisdictional differences, however subtle, should

be taken into consideration when structuring a joint venture. This chapter

discusses some key considerations that parties to multinational joint

ventures should take into consideration at the time of formation and on

an ongoing basis and provides insight into the general framework and

treatment of joint ventures in select jurisdictions.

1. Analysis Under Merger-Reporting Requirements and Merger-

Control Regimes

Depending on the scope and structure of a multinational joint

venture, it may be scrutinized by some antitrust agencies as a joint

venture while others will assess it under their respective merger control

regimes. For example, China’s National Markets Supervision

Management Bureau requires that any multinational joint venture—

including those established for a limited purpose and duration with a

competitively neutral effect (actual current and future potential)—be

subject to China’s merger control regime and reviewed accordingly.1 In

1. The Chinese Anti-Monopoly Law was not clear in this regard, but the

2019 Guiding Opinions on the Notification of the Concentration of

Undertakings indicated that all joint ventures meeting size thresholds

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Canada, by contrast, a multinational joint venture would likely be

reviewed under the Competition Bureau’s Competition Collaboration

Guidelines2 and only subject to challenge if the joint venture would

likely substantially reduce or eliminate competition in any relevant

market.3

The nature of the joint venture may also be relevant to how antitrust

authorities review it, as many jurisdictions treat some joint ventures

under merger control rules, but not others. For example, the European

Commission provides guidance as to how it evaluates full-function joint

ventures.4 Full-function joint ventures are subject to a two-part test under

the EC Merger Regulations (ECMR),5 the second part of which is only

applicable to full-function joint ventures.6 This is in contrast to the

Chinese approach where the National Markets Supervision Management

Bureau does not distinguish between full-function joint ventures that are

must comply with the merger control regime, regardless of whether it is a

full-function joint venture or not. See Part B.4. of this chapter for an

overview of China’s antitrust treatment of joint venture conduct.

2. COMPETITION BUREAU CANADA, ENFORCEMENT GUIDELINES—

COMPETITOR COLLABORATION GUIDELINES, (2009), available at

http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/Competitor-

Collaboration-Guidelines-e-2009-12-22.pdf/$FILE/Competitor-

Collaboration-Guidelines-e-2009-12-22.pdf. See Part B.3. of this chapter

for an overview of Canada’s antitrust treatment of joint venture conduct.

3. Id. at 19.

4. A full-function joint venture is understood to be a joint venture which is

going to perform on a lasting basis all the functions of an autonomous

economic entity. See Council Regulation (EC) No. 139/2004, art. 101,

2004 O.J. (L 24) 1 art. 3. The management of a full-function joint venture

must be dedicated to its daily operations and access to resources

sufficient to conduct its business. Further, the joint venture must not only

be for a specific function of the business of the parties to the joint

venture, but must have a sufficient presence on the market (for example,

by generating a substantial share of total turnover). Finally, the joint

venture must last for more than a short, finite duration. See Part B.5. of

this chapter for an overview of the EU’s antitrust treatment of joint

venture conduct.

5. Council Regulation (EC) No. 139/2004, art.101, 2004 O.J. (L24) 1.

6. The EU Court of Justice has confirmed that non-full function joint

ventures do not require merger control. Case C-248/16, Austria Asphalt

GmbH & Co. OG v. Bundeskartellanwalt, 2017 O.J. (C 374) 7. However,

some EU member states—including Germany and the United Kingdom—

treat joint ventures differently and require compliance with their merger

control procedures for transactions meeting relevant filing thresholds.

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independent of their parent companies and operate on a standalone basis

and non-full-function joint ventures. As an illustration of this difference,

consider the proposed P3 shipping alliance among three large ocean

container shipping lines—a relatively loose joint venture that would have

pooled space on ocean container ships among the three lines. Although

the U.S. and EU did not consider the P3 alliance a merger and approved

it, China’s Ministry of Commerce, which held antitrust responsibilities

prior to the establishment of the National Markets Supervision

Management Bureau in 2018, blocked the proposed transaction, after

analyzing it under its merger control rules.7

Where a multinational joint venture is scrutinized as a merger, the

participants should consider that the various analytical factors, such as

market definition and premerger notification thresholds, may vary in the

relevant jurisdictions. Similarly, the competitive landscape (e.g., number

of competitors, market shares, number of suppliers) may also differ

within the relevant jurisdictions. Accordingly, it often will be prudent to

conduct a multi-jurisdictional antitrust analysis to identify potential

antitrust risks and avoid a situation where a joint venture is allowed in

one country and challenged or blocked in another. It may also be

advisable to prioritize the submission of notifications in jurisdictions that

take longer to review filings generally or that may be expected to more

closely review the joint venture at issue.

2. Analysis as Competitor Collaborations

In some instances, joint ventures may be reviewed as a collaboration

between competitors, especially where the venture is not fully integrated

and/or is for a limited duration. As a general rule, most jurisdictions will

object to joint ventures that appreciably restrict or substantially reduce or

eliminate competition in that jurisdiction. There are differences between

jurisdictions, however, including exceptions to the general rule. For

example, in the European Union, Article 101 of the Treaty on the

Functioning of the European Union (TFEU)8 prohibits any “hard core”

restriction of competition (e.g., price fixing, limitation of output or sales,

7. See e.g., Michael N. Sohn, A Look at China’s Decistion to Block P3

Shipping Alliance, Law360 (June 24, 2014), available at

https://www.law360.com/articles/550944/a-look-at-china-s-decision-to-

block-p3-shipping-alliance.

8. Consolidated Version of the Treaty on the Functioning of the European

Union, art 101, Sept. 5, 2008, 2008 O.J. (C 115) 47 (effective Dec. 1,

2009) [hereinafter TFEU].