Professor Herbert Hovenkamp, who worked closely with the late Professor Areeda as co-author of their antitrust treatise, has recently written specifically about those differences. Their share of the U.S. market for credit card network services is around 75 percent and growing steadily, and their members' collective share of the U.S. credit card issuing market is even higher. As I will explain, network joint ventures with this degree of dominance have enormous potential for anticompetitive conduct, which calls for more, not less, antitrust scrutiny. With all due respect, I believe that Mr. Allen's position, that antitrust scrutiny of Visa and other dominant network joint ventures needs to be relaxed, has it exactly backwards. The Special Competitive Characteristics of Network Joint Ventures Antitrust law has long recognized that joint ventures of actual or potential competitors have the potential for abusive conduct, but when those joint ventures are formed to operate networks they deserve special scrutiny.
Joint ventures can, of course, create efficiencies that enhance competition.
These are the efficiencies that accrue as participation in a network grows, simply as a result of the growth of the number of participants in the network. These positive externalities of network joint ventures have direct implications for competition and antitrust policy. As network joint ventures grow, these positive externalities add to their incumbency advantages and help to entrench them competitively. If a firm wants to compete as a national issuer of credit cards on the MasterCard or Visa network, it can recruit customers by offering a product that is superior in price or quality. The cards that it offers will be as useful to its first customer as they will be to its thousandth customer.