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Joint Ventures

Joint venture: two competitors agree to collaborate on a project like R&D, production, or distribution

  • Typically get rule of reason treatment
  • For a joint venture to get a blessing from an agency, there must be some argument about synergies and efficiencies that provide a procompetitive justification
  • Examples from cases: CBT, BMI, Topco

Caselaw:​

Texaco v. Dagher (2006)​

  • Holding: the per se rule is inapplicable
    • Has many of the provisions and attributes of a joint venture, effectively dismissed
  • Facts: joint venture (Equilon) formed between gas companies Texaco and Shell to refine and sell gas, set joint prices, but sell under separate brands
    • Venture could be dissolved at any time by mutual consent or, after an initial term of five years, unilaterally with two years notice
  • Note: how would this have gone under rule of reason? Factors to consider (good for P):
    • Considerations about the fixed price:
      • The joint pricing idea was conceived before the formation of the venture (even though it wasn't contained in the main joint venture agreements)
      • Pricing allowed Equilon to raise prices in areas when crude oil prices were low and stable
      • The efficiencies were independent of the agreement to set price, so price didn't need to be set together
    • Dissolution plan incentivized sticking with the venture for a long time
    • Altogether, this suggests that this joint venture went too far and let the gas companies set the same price