A Neglected Theory of Harm: Joint Ventures as Facilitators of Collusion Across Markets

5 Journal of Antitrust Enforcement 434, 2017

University of Hong Kong Faculty of Law Research Paper No. 2019/015

22 Pages Posted: 11 Feb 2019 Last revised: 19 Apr 2019

See all articles by Thomas K. Cheng

Thomas K. Cheng

The University of Hong Kong - Faculty of Law

Kelvin Hiu Fai Kwok

The University of Hong Kong - Faculty of Law

Date Written: October 1, 2017

Abstract

While there has been extensive discussion in the antitrust literature on the procompetitive and anticompetitive effects of joint ventures, there is a lack of systematic analysis on the potential of a joint venture to have collusive harm beyond its home market. This article aims to fill the gap in the literature by systematically accounting for the possible ways in which a joint venture can facilitate collusion by its members outside of the venture’s home market, namely: (i) as a punitive mechanism for the cartel; (ii) as a provider of an important input; and (iii) as a facilitator of information exchange. In addition to discussing these theories of harm, this article will attempt to offer some ways in which such anticompetitive concerns raised by joint ventures can be alleviated or addressed under US antitrust law, including ex ante behavioural remedies and ex post conduct enforcement. The proposals are intended to preserve the efficiency-enhancing potential of joint ventures by permitting them as long as their collusion facilitating potential can be reasonably contained.

Keywords: Joint Venture, Collusion, Facilitating Practice, Information Exchange, US, Antitrust Law, Competition Law

JEL Classification: K21

Suggested Citation

Cheng, Thomas K. and Kwok, Kelvin Hiu Fai, A Neglected Theory of Harm: Joint Ventures as Facilitators of Collusion Across Markets (October 1, 2017). 5 Journal of Antitrust Enforcement 434, 2017, University of Hong Kong Faculty of Law Research Paper No. 2019/015, Available at SSRN: https://ssrn.com/abstract=3325153 or http://dx.doi.org/10.2139/ssrn.3325153

Thomas K. Cheng

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01242

Kelvin Hiu Fai Kwok (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

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