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January 11, 2006

Legal

Joint Ventures in Peril?

Posted by Mike Hofman at 6:16 PM

Yesterday, the Supreme Court heard oral arguments in a case that could make it much less attractive for companies to work together as joint venture partners. The case--Texaco and Shell Oil v. Dagher--was brought by a group of service station owners against the two oil giants. The station owners argued that, by marketing identical petroleum products together as partners in a joint venture, the two companies essentially engaged in price fixing.

The trial judge ruled in favor of the oil companies on the grounds that this was not a case of two companies setting prices in unison, but rather, one independent company setting prices on its own. The company just happened to be owned jointly by two large companies that would otherwise be rivals. A majority of the appeals court subsequently overturned that ruling and agreed with the gas station owners that, in effect, the joint venture enabled the two giants to avoid competition. According to this report posted on the CNN/Money website at the start of the Supreme Court's current term, legal analysts believe that, if the justices agree with the appeals court, companies may abandon joint ventures altogether, a move that could precipitate a number of spinoffs and mergers. Wouldn't that be exciting!

To read the briefs and for more analysis, check out this page on SCOTUSBlog, a repository of blow-by-blow coverage of Supreme Court cases.

1 Comment

Posted by: Joshua Estrin at January 11, 2006 9:49 PM

The melody of corporate America often a string of dissonant notes. Even the most accomplished painist like Stan Whitmire could not put the pieces of this song together to create anything less than a musical mess.

Trump, Martha Stewart and the ever ellusive Enron have made us all stop and wonder why we need to put up with such nonsense and why we can't simply play like good boys and girls and not be afraid to make a profit without such drama.

We simply need to Shut Up and Listen to ourleves and use Action, Ability and Awareness to make success stick

Joint ventures can be complicated and chaotic but lets keep them legal and simple when it hits the Supreme Court we have all lost

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