FTC Announces Project To Follow Global and Innovation-Based Competition Hearings

The Federal Trade Commission announced today "The Joint Venture Project" to clarify and update antitrust policies regarding joint ventures and other forms of competitor collaborations. The Joint Venture Project grows out of public hearings on global and innovation- based competition held by the FTC last year.

"The recent FTC hearings showed that global and innovation-based competition is driving firms toward ever more complex collaborative agreements, which sometimes raise new competition issues," said Robert Pitofsky, Chairman of the FTC. "The Joint Venture Project will challenge us to clarify antitrust rules in areas where the law has also become more complex, and to update the rules, if necessary, to take into account the changing market dynamics of some new industries, as well as the continuing market dynamics of stable industries. Despite the obvious difficulty of such a project, it is one that should be done to see whether we can improve our guidance to the business community on joint ventures, strategic alliances, and other forms of collaboration among competitors."

According to the FTC staff report on last year’s hearings, business rivals may collaborate for a number of different reasons -- to combine existing research or production facilities, to jointly invest in new facilities in the U.S. or abroad, to jointly distribute or sell their products, or to jointly buy supplies they need for production, for example. Joint ventures with foreign firms may carry the promise of opening markets that otherwise might be difficult to enter. Joint ventures with rivals in the U.S. may enable the participating firms to defray high research and development costs, spread risk, or exploit complementary expertise and technological capabilities. At the same time, some joint ventures raise concerns about the degree to which competition among rivals has been curtailed. The FTC staff report concluded that it has been difficult for antitrust policy to take into account the complexity of the business reasons for joint ventures and at the same time provide clear guidance on which joint ventures raise competitive concerns.

One outcome of the project could be the development of additional guidelines to describe the antitrust analysis of joint ventures and other competitor collaborations. At the moment, there are two sets of guidelines, issued jointly by the FTC and the Antitrust Division of the Department of Justice, that provide guidance relevant to joint ventures in the areas of health care and intellectual property.

The Joint Venture Project will be undertaken by the FTC’s Policy Planning staff, which prepared Volume I of the FTC hearings staff report, Competition Policy in the New High-Tech, Global Marketplace. Policy Planning staff estimate that the project will take approximately one year. DOJ’s Antitrust Division will provide continuing input as the project develops. In addition, there will be opportunities for public input, most likely beginning in the late spring or early summer and continuing at later stages of the project as well.

The Commission vote to authorize The Joint Venture Project was 5-0.

Copies of FTC press releases, consumer brochures and reports are available from the FTC’s web site at: http://www.ftc.gov and also from the agency’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. P971201)