Conceptualisation of Joint Ventures in EU Competition Law As Compared to the Approach in the United States
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Department of Law JOINT VENTURES AT THE INTERSECTION OF COLLABORATION AND CONSOLIDATION: Conceptualisation of Joint Ventures in EU Competition Law as Compared to the Approach in the United States Erja Askola Thesis submitted for assessment with a view to obtaining the degree of Doctor of Laws of the European University Institute Florence, November 2012 EUROPEAN UNIVERSITY INSTITUTE Department of Law JOINT VENTURES AT THE INTERSECTION OF COLLABORATION AND CONSOLIDATION: Conceptualisation of Joint Ventures in EU Competition Law as Compared to the Approach in the United States Erja Askola Examining Board: Prof. Giorgio Monti, EUI (Supervisor) Prof. Giuliano Amato, former EUI Prof. Heike Schweitzer, University of Mannheim, Germany Prof. Jerónimo Maillo, CEU San Pablo University, Spain © 2012, Erja Askola No part of this thesis may be copied, reproduced or transmitted without prior permission of the author ABSTRACT This dissertation compares the approaches adopted in the EU competition law and the U.S. antitrust law towards joint ventures. The question is two-fold, including (i) the study of the specific problems raised by the strict conceptualisation of joint ventures under the EU policy, as compared to the U.S; and (ii) the possible insights the U.S. experience could offer in this area. This study demonstrates that the categorical approach in the EU has involved, over time, a number of specific issues that have been avoided in the U.S.. These relate, in particular, to the concepts employed to make the jurisdictional distinction between the mutually exclusive rules for mergers and horizontal agreements, which have caused a number of complications and led to unnecessary forum shopping. These differences are explained and their implications analysed in an attempt to help understand the approaches chosen and to explore how the EU policy could be further developed. It emerges from this comparison that some of the highly technical issues concerning the legal characterization of joint ventures have reflected more fundamental differences in the enforcement attitude towards industrial cooperation between competitors as compared to mergers, including a different understanding of their effects on competition. This concerns, in particular, the controversial European "concentration privilege" favoring mergers and concentrative joint ventures over more limited cooperative alliances, whereas the U.S. enforcers have normally treated full integrations more suspect than partial ones. Inspiring from the insights learned by studying the US approach, this dissertation concludes with a recommendation to revisit and clarify the EU approach to joint ventures in two specific areas. First, it calls for an explanation on how the substantive analysis of joint ventures under Article 101 TFEU compares with that of mergers, particularly in relation to the assessment of market power. Second, it suggests that the fate of Article 2(4) EUMR concerning the treatment of spill-over collusion be reconsidered in the current framework, including a clarification of its current function and purpose, if any. TABLE OF CONTENTS TABLE OF CONTENTS .......................................................................................................... i ACRONYMS ........................................................................................................................... iii INTRODUCTION .................................................................................................................... 1 1 Research problem .............................................................................................................. 1 2 Typology ............................................................................................................................. 7 3 Theoretical insights ......................................................................................................... 11 4 Effects on competition and social welfare ..................................................................... 15 5 Intersection of collusion, collaboration and concentration ......................................... 20 PART 1 - CONCEPTUALISATION OF JOINT VENTURES UNDER THE EU COMPETITION LAW .......................................................................................................... 29 1.1 DOGMATIC SEPARATION OF STRUCTURAL AND BEHAVIOURAL ASPECTS .................................................................................................................................................. 32 1.1.1 Origins ............................................................................................................................ 32 1.1.1.1 Initial doctrinal developments ............................................................................... 33 1.1.1.2 Implications ............................................................................................................. 38 1.1.2 The Dichotomy Between Concentrative And Cooperative Joint Ventures ............ 44 1.1.2.1 The complexity of the jurisdictional division ....................................................... 45 1.1.2.2 Confirmation of the Concentration privilege ...................................................... 50 1.2 EVOLVING CONTENT AND IMPLICATIONS OF THE DUAL STANDARD .... 60 1.2.1 Extension of the scope of the merger proceedings ..................................................... 61 1.2.1.1 Simplification of the jurisdictional test ................................................................ 61 1.2.1.2 Change in the economic and legal rationale? ...................................................... 66 1.2.2 Attenuation of differential treatment under Article 101 TFEU ............................... 71 1.2.2.1 Improvement of the theory on potential competition ......................................... 72 1.2.2.2 Emergence of market power analysis ................................................................... 74 1.2.2.3 Available justifications ........................................................................................... 82 1.2.2.4 Impact on legal certainty and regulatory burden ............................................... 84 1.3 SPECIFIC ISSUES CONCERNING HYBRID CASES .............................................. 89 1.3.1 Initial issues raised by the coordination test ............................................................... 90 1.3.1.1 Suitability of Article 101 criteria in full-function cases ...................................... 90 1.3.1.2 Relevance of theories on oligopolistic interdependence ...................................... 96 1.3.2 Current interaction of the merger test and coordination test ................................. 101 1.3.2.2 Reduced role of the coordination test in joint venture market ........................ 107 1.3.3 Remaining role of Article 101 TFEU criteria in Merger Regulation ..................... 111 1.3.3.1 Assessment of spill-over effects outside the joint venture ................................ 112 1.3.3.2 Relationship with the doctrine of ancillary restraints ...................................... 120 i PART 2 - COMPARISON WITH THE APPROACH UNDER THE U.S. ANTITRUST LAW ...................................................................................................................................... 125 2.1 CONTRAST WITH THE EU CONCEPTS AND DOGMATIC CLASSIFICATIONS .................................................................................................................................... 129 2.1.1 Different focus of legal characterisation ................................................................... 129 2.1.1.1 Legal characterization embodied in the concept of a joint venture ................ 130 2.1.1.2 Actions of a single entity or a group of competitors .......................................... 141 2.1.2 Broader scope of the merger rules ............................................................................. 149 2.1.2.1 Irrelevance of the conceptual criteria used in the EU ....................................... 150 2.1.2.2 Treatment of the risk of spill-over collusion ...................................................... 155 2.2 CONTRAST WITH THE EUROPEAN DIFFERENTIAL TREATMENT AND “CONCENTRATION PRIVILEGE” ................................................................................ 161 2.2.1 Different interaction of the relevant rules ................................................................. 162 2.2.1.1 Absence of mutual exclusivity ............................................................................. 162 2.2.1.2 Regulatory burden and legal certainty ............................................................... 166 2.2.2 Implications in substantive analysis .......................................................................... 170 2.2.2.1 General attitude towards cooperation vs. consolidation................................... 171 2.2.2.2 Market power analysis in joint venture context ................................................ 175 2.2.2.3 The case of potential entrants ............................................................................. 187 2.2.2.4 Efficiencies ............................................................................................................ 191 CONCLUSIONS................................................................................................................... 197 1. Comparative explanations ....................................................................................... 198 2.