Ownership and Control: Implications for the Analysis of Interlocking Directorates, Partial Equity Ownership Acquisitions, and Joint Ventures

Sun Jul 26 10:26:01 EDT 2015
Dr. Elizabeth Bailey

Strategic alliances and joint ventures are vehicles through which firms can pool their capital, intellectual know-how, and marketing and distribution assets. By combining the complementary strengths of the partners involved, these ventures have facilitated new product development, as well as innovation in manufacturing and production. For antitrust and competition policy, the challenge is that these ventures often involve collaborations among competitors. To provide guidance on the complex competitive issues that can arise in these types of ventures, the US Federal Trade Commission and the Department of Justice issued Antitrust Guidelines for Collaborations Among Competitors in 2000.

In this chapter from Economics of Antitrust: Complex Issues In a Dynamic Economy, NERA Vice President Dr. Elizabeth Bailey provides a thoughtful and practical guide to understanding the competitive implications of collaborations and joint ownership interests involving competitors. Cases involving interlocking directorates, partial equity ownership acquisitions, and joint ventures often highlight that ownership and control are not one and the same. Ownership does not always imply control, and control need not be derived from the financial ownership of the underlying assets. One important conclusion is that an economic analysis of these issues requires a careful inquiry into the facts and an appreciation of the reasons behind the development of the alliance or joint venture in the first place.