Introduction

Joint ventures and alliances are forms of cooperation that undertakings, often active on the same relevant market, can use to achieve common market objectives. In an alliance, undertakings coordinate their activities and so partially integrate their commercial interests. A joint venture is a separate company, created for a special purpose and typically fully owned by the mother company(ies). Joint ventures are often used for the joint development, exploitation, and commercialization of a new technology or product. Such cooperative efforts carried out by the undertakings can generate and promote efficiencies in different ways and contribute to welfare. Common examples of the possible beneficial effects of joint ventures are concentrated research efforts, rationalized distributive and commercial structures, and the provision of a better-structured set of services.

Joint ventures and alliances can also raise serious anticompetitive concerns. The firms involved may use their cooperation agreements as a vehicle to exchange information and coordinate actions beyond what would strictly be necessary for achieving efficiency gains. That is, their cooperation may induce collusion. Typically, when competing firms involved in the venture cooperate, their market power increases and it is not always straightforward to tell whether that increase was brought about by synergies or restrictive clauses in the agreement and the stifling of competition. Hence, joint ventures and alliances should come under close scrutiny by the competition authorities, especially when market power was already significant before the setting up of the joint venture.