Texaco, Inc. v. Dagher

By Michael Halfenger, Rebecca E. Wickhem and Michael A. Naranjo

The United States Supreme Court this week held in Texaco, Inc. v. Dagher that (1) it is not per se unlawful under Section 1 of the Sherman Act for a legitimate, economically-integrated joint venture to set the prices at which it sells its separately branded products; and (2) certain "core" activities of a legitimate joint venture, such as the venture’s setting of its own prices, may be held lawful even without resort to an ancillary restraints analysis. Texaco, Inc. v. Dagher, Nos. 04-805 and 04-814, slip op. at 3-6 (February 28, 2006). The Court’s decision is likely to reduce uncertainty caused by the Ninth Circuit’s application of the per se rule to joint venture pricing determinations. In its unanimous rejection of the lower court’s analysis, the Supreme Court (with Justice Alito not participating) reaffirmed that legitimate joint ventures are not subject to heightened antitrust scrutiny.