Cheng and Kwok on Joint Ventures as Facilitators of Collusion Across Markets (new article)

"A neglected theory of harm: joint ventures as facilitators of collusion across markets"
Thomas Cheng and Kelvin Kwok
Journal of Antitrust Enforcement
Oct 2016 (advance access)

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.  This article was nominated and shortlisted for the Concurrences Antitrust Writing Awards 2017 (concerted practices category).