Applicable Statutes Guiding Joint Ventures

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Table of Contents

Introduction
Main body
Conclusion
References

Introduction

There are a number of regulations that apply to the formation and operation of joint ventures in the United States economic market, which is taken to mean two separate parties entering into agreements than merger agreements so as to engage in economic activities. The Sherman Act of 1890 applies to the formation and operation, as well as issues relating to monopolization or attempts to monopolize markets. Joint ventures depict a type of business where parties have a single project to accomplish. A pre-merger notification is required for the formation of a Joint Venture, under the Hart-Scott-Rodino Antitrust Improvements Act, 1976. There is prohibition to having interlocking officers or directors under the section eight of the Clayton Act of 1914. The formation and operation of a joint venture is also dealt with by the Federal Trade Commission Act of 1914. Careful analysis is important since joint ventures may be used by companies to deprive others of access to inputs (Brodley, n.d.). There are various advantages that can be gained through joint ventures. The companies would enter into a new market, develop a new technology or product, or increase the productive capacity (Pitofsky, n.d.).

Main body

Some procedural advantages and protection of certain notified research and development joint ventures is provided in the National Cooperative Research Act of 1984. The US regulations govern collaborations between parties through the Antitrust Guidelines for Collaborations among competitors, while Merger Guidelines provide evaluation of high degree of integration among parties. Merger Guidelines come into play under certain circumstances. These include the fact that; the competition between collaborators in the relevant market has been eliminated by such collaboration if the integration enhances the efficiency, and if the participants in the integration are competitors. These guidelines will also be utilized if the specific and express terms do not terminate the collaboration within sufficiently limited period. Under certain conditions, antitrust analysis of joint ventures may be carried out through the Statement of Antitrust Enforcement Policy in Healthcare and the Antitrust Guidelines for the Licensing of Intellectual Property.

The regulation governs the basis of an analysis of type of collaboration and the rules to be applied in the analysis. The rule of reason may be applied by the authorities while analyzing the collaboration where participants seek to achieve precompetitive benefits through entering into an efficiency enhancing agreement. However, the authorities may be used to analyze the collaboration under the CC guidelines if the collaboration threatens competition or if there are no significant benefits that would warrant any further analysis. Thus, key components of business such as the nature of business agreement, the purpose of the business collaboration, whether competition has been hampered negatively, and whether the competitors have market power, may become under scrutiny. In order to determine whether harm has been caused by the collaboration, it is essential to analyze it in order to see the pro-competitive and anti-competitive measures, and the authority would challenge the collaboration if harm has been caused to competition.

In order to qualify for an analysis by the rule of reason, two factors will be fulfilled by the said Joint Venture. First, when the distributing, marketing, manufacture or development of some product is necessitated by the joint venture or that creation of a new product requires the joint venture. Secondly, when there is sharing of risks or pooling of resources by the parent organizations. The Federal Trade Commission (FTC) may regulate competition on its part by regulating unhealthy market agreements between competitors, such as those discouraging competition in the market and those promoting monopolization. It is the duty of the commission to promote competition in sectors where consumer impact is high such as in healthcare (FTC, 2010).

Conclusion

Various regulations may also be applicable according to the type of the joint ventures. In particular, Section 7 of the Clayton Act applies to mergers and acquisitions which involves partial mergers: i.e. the fully-integrated joint venture will deal with all aspects of line of business including marketing, sales among others. Those mergers established in order to carry out joint Research and Developments may be analyzed under the rule of reason because it is possible for the parent companies to separately develop new commodities, services and processes at a much faster pace, whereas increase in market power and decreased competition may result in the market, following these collaborations. The effective analysis of joint ventures aimed at R&D are analyzed effectively through the National Cooperative Research Act of 1984 which was also amended in 1993. The regulation is currently termed as the National Cooperative Research and Production Act (NCRPA). Other types of ventures include production ventures, network joint ventures and joint selling & buying ventures (Sakle, 2008).

References

Brodley, J. (n.d.). Antitrust and joint ventures, 95 Harv.L.REV.1521

FTC. (2010). Who we are. Web.

Pitofsky, R. (n.d.). Joint ventures under the Antitrust Laws: Some reflections on the significance of Penn-Olin, 82 Harv. L. Rev. 1007, 1016

Sakle, A. (2008). A study of joint ventures under competition laws in selected jurisdictions. Symbiosis Law School, Pune. Web.

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Applicable Statutes Guiding Joint Ventures

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