The US FTC holds that an agreement between two joint venture partners not to advertise or discount directly competing products violated s. 5 of the FTC Act (PolyGram/Warner)

It is said that hard cases make bad law, but sometimes easy cases can make even worse law, especially when theory gets in the way of common sense. A case in point is the Federal Trade Commission’s Three Tenors [1] decision last summer, in which the Commission held that an agreement between two joint venture partners not to advertise or discount two directly competitive products for a ten-week period around the launch of a new joint venture product violated the antitrust laws without any showing that the restraint harmed anyone other than the two partners themselves. The Commission reached this remarkable result apparently because it viewed the case as a good vehicle for resuscitating the Massachusetts Board of Optometry framework for applying a truncated rule of reason to restraints

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William J. Kolasky, Richard D. Elliott, The US FTC holds that an agreement between two joint venture partners not to advertise or discount directly competing products violated s. 5 of the FTC Act (PolyGram/Warner), 24 July 2003, e-Competitions July 2003, Art. N° 37291

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