Glossary

Joint Production Agreement

A joint production agreement is an agreement to collectively produce a product (for example, the joint
production of a mine by mining companies). While such agreements may include the coordination
between competitors of competitively sensitive aspects such as price, markets or output, they may be
pro-competitive in many cases. For example, coordination between competitors in the production of a
product may lead to cost savings, make a particular project possible that could not be achieved by
individual companies or involve the contribution of complimentary skills or assets (for example, one
party contributes unique research and development abilities and another capital).

https://uk.practicallaw.thomsonreuters.com/3-603 2965?
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Production agreements can restrict competition on these markets in several ways. For example: • in
particular in the case of a production joint venture, they may lead to a direct limitation of competition
between the parties, such as limitations on or alignment between the parties concerning the output,
quality, prices or other competitively important parameters of the joint venture’s sales • where the
parties have market power and the market characteristics are conducive to coordination, they may
result in the coordination of the parties’ competitive behaviour as suppliers (ie a collusive outcome),
which can result in higher prices or reduced output, product quality, product variety or innovation, and •
they can lead to anti-competitive foreclosure of third parties in a related market--for example, by
gaining enough market power, the parties engaging in joint production in an upstream market may be
able to raise the price of a key component for a market downstream. They can thus use the joint
production to raise the input costs of their rivals downstream and ultimately force them off the market

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publicationattachment/94836982-d6a7-4219-bf61-af41111fbbef/joint_production_agreement.pdf

joint venture
An agreement whereby the production is carried out jointly
by two or more parties

Subcontracting agreement
Horizontal
agreement between parties operating at the same level of
the market

agreement between parties operating at different level of

the market

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competitors/