Good antitrust news from the Court

Geoffrey Manne —  28 February 2006

texaco.jpg

To almost no one’s surprise, the Court ruled today (unanimously) in Texaco v Dagher that a pricing agreement between Shell and Texaco which was part of a lawful joint venure is not per se illegal under the Sherman Act. See this Reuter’s story here (HT: Bill). The key grafs:

Justice Clarence Thomas concluded in the seven-page opinion that it is not automatically illegal under the antitrust law for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products.

He said [the joint venture’s] pricing policy may be price fixing in a literal sense, but it is not price fixing in the antitrust sense.

Josh earlier reported on this case here. At the time he noted:

My prediction? SCOTUS will, as expected, tame the exotic beast. But how? I am doubtful, like Professor Ghosh at AntitrustProf Blog, that the Court will attempt to articulate an extension of the Copperweld doctrine (which protects wholly-owned subsidiaries from charges of intra-enterprise conspiracy under Section 1) to joint ventures. The United States Amici brief supporting Shell and Texaco urges the Court to take another route, ruling that per se analysis should not apply to this type of agreement because it “could not, and did not, itself eliminate competition.� That sounds right to me.

More when we see the opinion . . . .

Geoffrey Manne

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President & Founder, International Center for Law & Economics

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  1. TRUTH ON THE MARKET » SCOTUS Slays the “Exotic Beast” - February 28, 2006

    […] SCOTUS’ Dagher opinion is indeed good news. For those unfamiliar with the case, the Ninth Circuit held that the pricing policy of two joint ventures between Shell and Texaco were per se illegal under the Sherman Act. As it stood, the Ninth Circuit’s analysis threatened per se antitrust liability for joint ventures engaging in the unremarkable practice of setting prices for their own practices. Judge Fernandez’ dissent describes the ruling more creatively, arguing that it created a “exotic beast, no less strange than a manticore, roaming the business world.” After SCOTUS’ 8-0 reversal, the exotic beast roams no longer. […]