Joint Ventures and the Sherman Act: The Problem Revealed by American Needle and How Best to Address It

Thomas Brown, Katherine Robison, Ian Simmons, Jan 07, 2011

The transcript of the oral argument in this year’s most watched antitrust case, American Needle v. National Football League, captures a struggle about where to draw the line between joint venture activities that must be scrutinized under Section One and those that should not. That the Justices of the Supreme Court seemed uncertain about how to draw such a line while preserving the ability to review the activities of joint ventures under Section One is not surprising given the current state of antitrust law applicable to joint ventures.

Antitrust law holds joint ventures to an exacting standard. Joint ventures are required to defend their formation and their actions under Section One of the Sherman Act. Although pricing decisions of an integrated joint venture may not be subject to per se condemnation, all the actions of such a joint venture are, according to mainstream antitrust authorities, subject to scrutiny under Section One.

Antitrust law does not hold other collaborative enterprises to a similar standard. It does not demand that other legitimate cooperative forms of business (such as merged companies or parent and subsidiary corporations) justify each of their post-formation activities. And, although subjecting joint ventures to a more exacting antitrust standard can be reconciled with the text and structure of the Sherman Act, it makes no sense to predicate the level of scrutiny applied on the form of

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