Elgar original reference
Edited by Ariel Ezrachi
Chapter 16: Drawing the boundary between joint and unilateral conduct: parent–subsidiary relationships and joint ventures
Competition law systems typically draw a fundamental and basic distinction between concerted and independent action. As concerted, or coordinated, conduct between firms represents a joining of two independent sources of economic power which ‘deprives the market place of the independent centres of decision making that competition assumes and demands’, competition law rules attach special significance to it and treat it more ‘sternly’, view it more sceptically and consider it to be more ‘inherently fraught with antitrust risk’ than unilateral conduct. In contrast, fewer constraints are imposed on the unilateral behaviour of a firm as it is recognised that ‘if every unilateral action that restrained trade were subject to antitrust scrutiny, the courts would be forced to judge almost every internal business decision’ and the competitive enthusiasm that the anti-trust laws seek to promote might be threatened. Frequently, therefore, antitrust systems do not seek to control single firm conduct unless the firm at issue holds a significant degree of market power and acts anti-competitively to exclude its competitors. This important analytical distinction between concerted and unilateral conduct is drawn in both the US and EU systems of antitrust law. Section 1 of the Sherman Act 1890 and Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) respectively contain broad prohibitions of anticompetitive arrangements concluded between independent firms. Section 1 of the Sherman Act prohibits unreasonable restraints of trade effected by a ‘contract’, ‘combination’ or ‘conspiracy’ between persons.
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