The Supreme Court held 2/28/06 that it is not per se illegal under Section 1 of the Sherman Act, 15 U.S.C. § 1, for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products. The joint venture’s formation, which was not challenged, effectively merged Texaco’s and Shell’s domestic gasoline refining and marketing operations, thereby ending competition between the two companies in these lines of business. The Court concluded that although the joint venture’s “pricing policy may be price fixing in a literal sense, it is not price fixing in the antitrust sense,” because the policy was “little more than price setting by a single entity—albeit within the context of a joint venture—and not a pricing agreement between competing entities with respect to their competing products.” This decision is important to any business that is or may become part of a joint venture. Jones Day filed briefs on behalf of Texaco and presented oral argument on behalf of both successful petitioners.The NAM and the U.S. Chamber of Commerce filed a joint brief 1/14/05 supporting review of this case. We urged the Supreme Court to rule that joint venture pricing is not per se illegal, but rather that it should be analyzed under the rule of reason, which takes into account efficiencies and other valid justifications for the joint venture. The Ninth Circuit’s strict rule would have had a severe chilling effect on the creation and operation of joint ventures, and is at odds with the purpose of the antitrust laws to promote pro-competitive economic activity.
Decision Below: 369 F.3d 1108 (9th Cir. 2004). See also case # 04-805, Texaco Inc. v. Dagher.