March 11, 2021

Joint Ventures

Joint Ventures

U.S.-Soviet Joint Ventures: A New Opening in the East
      Russell H. Carpenter, Jr. and Bradford L. Smith, 43(1): 79–91 (Nov. 1987)
This Article reviews and evaluates Soviet laws that, for the first time, permit Western business enterprises to form joint ventures in the U.S.S.R. The Article identifies provisions that are likely to raise concerns for foreign investors and considers the prospects for establishing successful joint ventures in the Soviet Union.

Joint Ventures Under EEC Competition Law
      John H. Riggs, Jr. and Anthony Giustini, 46(3): 849–908 (May 1991)
This Article is a primer on European Economic Community competition law aspects of joint ventures affecting European markets. It explains the different substantive rules and notification procedures for concentrative joint ventures under the EEC's new business combinations regulation and cooperative joint ventures under Article 85 of the Treaty of Rome.

Refusals to Deal in the Context of Network Joint Ventures
      William H. Pratt, James D. Sonda, and Mark A. Racanelli, 52(2): 531–57 (Feb. 1997)
Networks of all shapes and sizes, from automated teller machine networks to credit card networks, are becoming an increasingly integral part of modern life and an increasingly important way of doing business for companies involved in joint ventures. This Article focuses on the issue of how antitrust laws should assess and ultimately judge the particular type of efficiencies exhibited by network joint ventures —so-called network efficiencies. Network efficiencies are those that a joint venture is capable of producing over and above ordinary economies of scale generated by joint ventures. Unlike certain types of joint ventures, such as those for research and development, network ventures generate more efficiencies as more firms join the venture. The Article concludes that the accepted way that antitrust courts view and analyze collateral restraints adopted by joint ventures must be tailored when the subject of the courts' scrutiny is a network joint venture in order to take into account the network's ability to generate network efficiencies.

Mergers and Acquisitions: Antitrust Limitations on Conduct Before Closing
      M. Howard Morse, 57(4): 1463–86 (Aug. 2002)
U.S. antitrust authorities have brought a number of enforcement actions in recent years challenging conduct of firms proposing mergers, acquisitions, and joint ventures. These cases have attacked covenants restricting activities pending closing of proposed transactions as well as initial efforts to integrate operations and even exchanges of information among parties proposing to merge. The government is proceeding on theories that such conduct is illegal "gun-jumping" or "price-fixing," and is unlawful under the Hart-Scott-Rodino Act, the Sherman Act, or the Federal Trade Commission Act. This Article outlines the legal framework for analyzing pre-closing conduct by parties proposing transaction, describes the conduct that has gotten firms in trouble in the recent enforcement actions, and provides practical guidelines as to what is lawful and unlawful in this confusing area of the law.

Lawyers and Trust in Business Alliances
      George Dent, 58(1): 45–82 (Nov. 2002)
The proliferation of strategic business alliances should be good news for lawyers. These are complex transactions that require advice on legal compliance and the drafting and negotiation skills of lawyer. Unfortunately, many businesspeople deny that lawyers add value to strategic alliances. They charge lawyers with eroding the trust and cooperation needed for a successful alliance and, accordingly, often admit lawyers to negotiations as late as possible and even then minimize their role. These allegations may be exaggerated, but to some extent they reflect real shortcomings of lawyers that deprive clients of services that could improve business alliances. These shortcomings have been almost completely ignored by law journals. The oversight is especially troubling because similar problems with lawyers crop up in other areas, like marriage, where trust and cooperation are needed. This Article marks a first effort to fill the gap in the legal literature. It begins by discussing the unusual qualities of strategic alliances and why they pose unique problems for lawyers. It then considers how lawyers' negotiation tactics can cultivate, rather than erode, trust between the parties in alliances and suggests substantive contract terms lawyers can employ to foster trust and cooperation. Finally, it explores how law schools and continuing legal education improve lawyers' performance not only in strategic business alliances but in all situations where trust and cooperation are important.

Model Limited Liability Company Membership Interest Redemption Agreement
      By the Subcommittee on Limited Liability Companies of the committee on Partnerships and Unincorporated Business Organizations, ABA Section of Business Law, 61(3):1197—1234 (May 2006)

Joint Ventures and the Supreme Court's Decision in Texaco, Inc. v. Dagher: A Win for Substance Over Form
      James H. "Hart" Holden, 62(4): 1467—1478 (August 2007)
In the summer of 2004, the Court of Appeals for the Ninth Circuit issued its opinion in Dagher v. Saudi Refining, Inc., holding that the decision of a legitimate joint venture between two former competitors to charge a single price its products could constitute per se illegal price fixing under Section I of the Sherman Act. This ruling generated significant antitrust uncertainty as to what joint ventures can and cannot do in operating their business. The Supreme Court unanimously reversed the Ninth Circuit, and in so doing helped to clarify this important but murky area of business law. This paper details the Court's Dagher decision, and the guidance that can be taken from it.

How Many Masters Can a Director Serve? A Look at the Tensions Facing Constituency Directors
     E. Norman Veasey and Christine T. Di Guglielmo, 63(3): 761–776 (May 2008)
As business trends change and capital markets evolve, directors may face factual situations that raise new questions about the contours of directors' fiduciary duties. One increasingly common situation that presents tensions for a growing number of directors is the allegiances by individuals elected to the board by, and who may seemingly "represent," particular constituencies of the public corporation. Such "constituency directors" or "representative directors" may include, for example, directors designated by creditors, venture capitalists, labor unions, controlling or other substantial stockholders, or preferred stockholders; directors elected by a particular class of stockholders; or directors placed on the board by or at the behest of other constituencies.

We raise several questions. When a particular constituency causes one or more directors to be elected to the board, to whom or to what is that director loyal or beholden? The corporation? All the stockholders? If "yes" as to the corporation and all the stockholders, may the director give some "priority" to the views of the constituency that caused him or her to be placed on the board? Since the board must act collectively and the majority might not favor the outcome desired by the particular constituency, are these questions largely academic?

In this Article, we suggest that the existing standards of liability for breach of fiduciary duty should not change in order to account for changing circumstances. The existing standards of conduct and liability incorporate the necessary flexibility to balance the potentially competing duties of constituency directors with protection of the interests of various corporate constituencies. And if the fiduciary duty standards in corporation law are not sufficiently flexible to accommodate particular circumstances, constituents may wish to invest in an alternative entity (such as a limited liability company) governed by other law that will accommodate their needs. Or perhaps the investor may be able to effect a legally authorized change in the certificate of incorporation of the corporation to permit it to be governed more to the investor's liking.

The Enforceability and Effectiveness of Typical Shareholders Agreement Provisions
      Corporation Law committee of the Association of the Bar of the City of New York, 65(4): 1153–1204 (August 2010)

Death by Auction: Can We Do Better?
     Peter B. Ladig; 73(1): 53-84 (Winter 2017/2018)
The purpose of a business divorce is to sever the business relationship between or among the owners of the business. The most common judicial means of achieving this goal is a state dissolution statute. Most state dissolution statutes empower courts to sever the business relationship through various means. Some states even permit the entity or the other equity interests to avoid dissolution by exercising a statutory right to buy out the plaintiff’s interests. Delaware has eschewed this approach, instead providing few statutory directions or options and trusting its Court of Chancery to exercise its equitable discretion appropriately. Delaware courts historically were reluctant to dissolve operating, profitable entities, but in recent years Delaware courts have come to recognize the fallacy of forcing people to continue a business relationship that has fallen apart, and judicial dissolution is no longer the rarity it once was. A continuing problem, however, is that there is little common law guidance on how dissolution should be accomplished in a manner that is consistent with principles of Delaware law and that also recognizes the unique nature of these kinds of business divorces. In the absence of such guidance, Delaware courts default to what they know: an auction or sale process designed to attract the most number of bidders to maximize the entity’s value. This article suggests that the Court of Chancery should not consider an auction or other public sale process to be the default solution, that general principles of equity permit the Court of Chancery to grant many of the statutory remedies available in other states, and that a forced public sale should be the remedy of last resort.

LLC Default Rules Are Hazardous to Member Liquidity
     Donald J. Weidner, 76(1): 151-182 (Winter 2020-2021)
Simply by forming LLCs, entrepreneurs now unwittingly lock themselves in to perpetual entities that offer them no liquidity and present them with costly procedural obstacles to enforcing both their agreement among themselves and their statutory rights. Even in atwill LLCs that are member-managed, recent LLC acts deny members both a right to dissolve and a right to be bought out. While thus locking members in, these acts deny them standing to bring many if not most of their claims among themselves or against the firm.