Supreme Court Upholds Joint Venture Product Pricing

Can two competitors form a joint venture and sell products under their two competing product brands through the joint venture at a single agreed-upon price? The Supreme Court recently considered this question in Texaco, Inc. v. Dagher, ruling in a unanimous (8-0) decision issued on February 28, 2006, that it was not per se illegal under the Sherman Antitrust Act for true joint venturers to enter into such a product pricing agreement.

In Dagher the defendants, Texaco and Shell Oil, ceased competing as individuals in the market and entered into a joint venture to refine and sell gasoline in the western United States under the two companies' original brand names. Prior to its formation, the joint venture was approved via consent decree by the Federal Trade Commission as well as several state attorneys general of western states. The joint venture then set a single price for the gas sold by both brands. Service station owners of the two brands sued, contending that the arrangement was per