A New Standard for Evaluating Conglomerate Joint Ventures under Clayton Act Section 7 and a New Formula for the Potential-Competition Doctrine

Authors

Avarelle Silver

Abstract

The legality of a proposed conglomerate joint venture is presently judged under Clayton Act section 7 by the same standard that is applied to assess the legality of a challenged conglomerate merger. The standard, known as the potential-competition doctrine, primarily relies on calculations of firm concentration. This Comment argues that the doctrine inadequately addresses the issues posed by certain conglomerate joint ventures, distinguished by their exceptionally high costs and risks. The Comment proposes a new potential-competition formula distinctly designed for joint ventures. The new formula also takes into account the risk factors involved in the undertaking, the capital requirements, the influence of foreign competition, and the likelihood that the venture will result in technological advancement or other efficiencies.

Recommended Citation

Avarelle Silver, A New Standard for Evaluating Conglomerate Joint Ventures under Clayton Act Section 7 and a New Formula for the Potential-Competition Doctrine, 33 Hastings L.J. 1441 (1982).
Available at: https://repository.uclawsf.edu/hastings_law_journal/vol33/iss6/4