STAFF DISCUSSION DRAFT:
FOR PURPOSES OF DEBATE AND DISCUSSION ONLY
This discussion draft, prepared by a member of FTC staff, does not necessarily reflect the views of the Commission, any Commissioner, or any other FTC staff. Responses to this draft may be submitted either by electronic mail to "jventures@ftc.gov" or, captioned "Comment on Issues Relating to Joint Venture Project -- Classical Market Power Discussion," addressed to Donald S. Clark, Office of the Secretary, Federal Trade Commission, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C., 20580.
THE ROLE AND ASSESSMENT OF CLASSICAL MARKET
POWER IN JOINT VENTURE ANALYSIS
Michael S. McFalls
Policy Planning
Federal Trade Commission
October 1997
TABLE OF CONTENTS
II. Why Is Market Power Relevant to Antitrust?
III. How Do Courts and Agencies Evaluate Market Power?
IV. When Is Single-Share Analysis Applied to Competitor Collaborations?
A. Predicting the Market Power of Actual Competitors Who Will Cease Competing Against Each Other and Their Collaboration in the Joint Venture Market
B. Predicting the Market Power of Potential Competitors Who Will Cease Competing Against Each Other and Their Collaboration in the Joint Venture Market
C. Assessing the Market Power of Firms that Have Ceased Competing Against Each Other and Their Collaboration in the Joint Venture Market
V. How Can "Insider Competition" Change the Ability and Incentive to Exercise Market Power?
A. How Does Insider Competition Limit the Potential Market Power of Competitor Collaborations?
1. The Ability and Incentive of Collaborators to Compete Against Each Other Outside of the Joint Venture, through separate, Independent Operations in the Joint Venture and Other Markets
2. The Ability and Incentive of Collaborators to Compete Against Each Other Within the Joint Venture
3. The Ability and Incentive of Collaborators to Compete Against the Joint Venture As Part of Another CollaborationB. What Factors Make Insider Competition More or Less Likely?
1. Ability of Partners to Compete
2. Ownership, Control, and Incentives to Compete
3. Duration of the Collaboration
4. The Potential to Exercise Market Power
5. Exchanges of InformationC. How Have Courts and Agencies Analyzed Insider Competition?
1. The Ability and Incentive of Collaborators to Compete Against Each Other Outside of the Joint Venture, through Separate, Independent Operations in the Joint Venture and Other Markets
2. The Ability and Incentive of Collaborators to Compete Against Each Other Within the Joint Venture
3. The Ability and Incentive of Collaborators to Compete Against the Joint Venture As Part of Another CollaborationD. How Should the Potential for Insider Competition Be Weighed in the Analysis of Market Power?
VI. Should the Agencies Adopt Market Share Safe Harbors for Joint Ventures Based on Merger Analysis?