Antitrust, Innovation, and Competitiveness

By Thomas M. Jorde; David J. Teece | Go to book overview
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corporations and 16.7 percent in terms of sales. Ibid. at 3, 4. As to the nature of the joint R&D projects, 54.3 percent of the total cases were developmental research. Basic and applied research were 13.6 and 32.1 percent respectively. In the case of large corporations with capital of more than 10 billion yen, the total basic and application research amounted to 52.1 percent.
42.
Regulation No. 418/85 of 19 December 1984 on the application of Art. 85(3) of the Treaty to categories of research and development agreements, O.J Eur. Comm. (No. L 53) 5 ( 1985), entered into force March 1, 1985, and applicable until December 31, 1997. The statutory framework of Reg. 418 is complex and can best be illustrated by highlighting its most important features. It applies to three categories of agreements involving R&D: (1) joint research and development of products or processes and joint exploitation of the results of that R&D; (2) joint exploitation of the results of R&D product or processes pursuant to a prior agreement between the same parties; and (3) joint research and development of products without joint exploitation should the agreement fall within the purview of Art. 85(1). Under Reg. 418, joint exploitation is interpreted to mean joint manufacturing and licensing to third parties. Joint distribution and sales, however, are not covered and require individual exemptions pursuant to Art. 85(3).
43.
Professor Jorde testified on July 26, 1989, in favor of both a registration and certification approach. See Jorde and Teece ( 1989c). Legislation advancing a registration approach for production joint ventures has also been introduced in the Senate by Senators Patrick Leahy (D-VT) and Strom Thurmond (R-SC) (S. 1006). Three aspects of H.R. 4611 bear noting. First, relevant market definition under rule of reason analysis would specifically consider the worldwide capacity of suppliers. Second, foreign participation in a production joint venture would be limited to 30 percent of the voting securities or equity interests, and all production facilities would have to be located in the United States or its territories. Third, apparently production joint ventures would not be limited to efforts designed to commercialize joint R&D, nor need they be related to innovation.
44.
See Department of Justice release, "Thornburgh Mosbacher Send Revision Legislation to Congress" ( May 7, 1990) (supporting and detailing "legislation designed to facilitate joint production ventures"), reported at Antitrust and Trade Regulation Report 58, no. 1465 ( May 10, 1990), p. 701.
45.
As Richard Nelson ( 1990) notes, a wide variety of new kinds of organizational arrangements is emerging to support innovation. He predicts, and we concur, that some will succeed, and some will not. Our concern is that because the requirements of innovation are not well understood in mainstream economics and in contemporary antitrust analysis, there is significant danger that the performance of U.S. firms will be impaired by outdated antitrust law.

REFERENCES

Aoki M. 1989 "Global Competition, Firm Organization, and Total Factor Productivity: A Comparative Micro Perspective." Paper presented at the International Seminar on the Contributions of Science and Technology to Economic Growth, OECD, Paris (June).

Arrow Kenneth J. 1962. "Economic Welfare and the Allocation of Resources for Invention." In National Bureau of Economic Research, ed. The Rate and Direction of Inventive Activity. Princeton: Princeton University Press, pp. 609-625.

Arthur Thomas C. 1986. "Farewell to the Sea of Doubt: Jettisoning the Constitutional Sherman Act". California Law Review 74:263-376.

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