In terms of competition policy, the problem is to weigh the potential reduction in competition against the potential benefits of pooling risks, sharing capital costs and diffusing knowledge. Joint ventures are now becoming more prevalent in the development of new technologies. Thus, joint ventures are common in resource extraction industries where capital costs are high and where the possibility of failure is also high. Joint ventures are usually justified on the grounds that the specific project is risky and requires large amounts of capital. In several cases it can be advantageous for companies to cooperate with other companies. Joint ventures can become an issue for competition policy when they are established by competing firms. A joint venture is when different companies cooperate as partners. It is similar to a partnership, but limited to a specific project (such as producing a specific product or doing research in a specific area). © European Commissionįor more information : Article 3(4) of the Merger Regulation.Ī joint venture is an association of firms or individuals formed to undertake a specific business project. The reasons behind forming a joint venture include business expansion, development of new products or moving into new markets, particularly overseas. The risks and rewards of the enterprise are also shared. Full-function joint ventures which act on the market independently from their mother companies are treated as concentrations under the Merger Regulation. A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal. In practice joint ventures encompass a broad range of operations, from merger-like operations to cooperation for particular functions such as R&D, production or distribution. Under the EU competition rules, joint ventures are undertakings which are jointly controlled by two or more other undertakings. Association of firms or individuals formed to undertake a specific business project. A joint venture is a temporary, strategic business arrangement in which two or more parties collaborate in order to achieve a specific goal.
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