Rules of the Game Spelled Out For Business Collaborations

Both government and business leaders say collaboration is necessary and often can encourage competition by helping firms expand into foreign markets, fund research and development and lower production and other costs.

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However, to be legal, alliances, whether using the Internet or old-fashioned channels, should adhere to certain guidelines.

In April, the Federal Trade Commission and the Department of Justice published “Antitrust Guidelines for Collaborations Among Competitors.” The information spells out some of the rules under which rivals may join forces, noting “the increasing varieties and use of competitor collaborations have yielded requests for improved clarity regarding their treatment under the antitrust laws.”

In assessing whether the arrangements are hindrances to competition, the two agencies that oversee antitrust matters focus on six factors:

• Exclusivity — To what extent do participants continue to compete through separate, independent business operations or through memberships in other collaborations?
• Control over assets — In general, the greater the contribution of specialized assets to the collaboration that is required, the less participants may be able to compete.
• Financial interests — The greater the financial interest in the collaboration, the less likely is the participant to compete with the collaboration.
• Control of competitively significant decision making — This addresses the extent to which participants can independently control pricing and output of the collaboration and raise or lower competitive concerns.
• Likelihood of anti-competitive information sharing — Collaborations need safeguards to avoid disclosing sensitive information about markets or participants’ operations.
• Duration of the collaboration — The shorter the duration, the more likely participants are to compete against each other and their collaboration.

For the full story, see the Sept. 25 print edition of Transport Topics. Subscribe today.