Collaborations in the Chemicals Industry: Why the Ancillary Restraints Doctrine Matters
In July 2020, the European Commission fined several purchasers of ethylene—a chemical used most commonly in plastics manufacturing—a total of €260 million for coordinating purchase-price negotiation strategies. The Commission found that, from December 2011 to March 2017, the companies aligned their positions before and during bilateral negotiations with sellers in order to depress the ethylene monthly contract price, a benchmark commonly used in supply agreements. Although price-fixing cases more often involve sellers agreeing on prices charged to buyers, this case involved buyers allegedly agreeing on prices paid to sellers. The Commission treated the conduct as a naked buyers’ cartel, emphasizing that EU competition rules prohibit both seller-side and buyer-side price coordination because either can distort competition.
This enforcement has also generated follow-on private litigation by ethylene sellers seeking damages for allegedly receiving less than they would have, absent the conspiracy. Claims in Germany and the Netherlands have escalated rapidly: by mid-2025, six sellers’ claims reportedly exceeded $6 billion; by February 2026, Westlake disclosed 14 lawsuits, with certain claims totaling more than €8.7 billion plus interest; and by mid-2026, total claimed damages reportedly surpassed €10 billion.
The case has unsettled the chemicals industry and risks chilling lawful collaborations that involve competitors.
No comparable claims have yet been brought in the United States, but the incentives for private plaintiffs would be substantial, given treble damages. US enforcers and courts generally treat horizontal agreements to coordinate purchase prices the same way they treat seller-side price fixing: as per se unlawful where the agreement is naked and unconnected to any legitimate collaboration.
The harder question is whether other chemicals industry buy-side collaborations should receive the same treatment. They should not. The industry relies on complex arrangements to manage scale, risk, supply security, and innovation. Those arrangements may involve competitors and include price-adjacent terms, but they can be highly procompetitive. This Legal Update discusses why the ancillary restraints doctrine—and the rule-of-reason framework that follows from it—should protect properly structured collaborations from categorical condemnation.
Collaborations in the Chemicals Industry
Chemical companies frequently enter into complex horizontal and vertical agreements with competitors, such as product swaps and joint purchasing agreements, which may encourage competition by ensuring that product is available to customers, or by reducing the cost of obtaining upstream supplies (and thereby bringing down consumers’ prices). For instance, Together for Sustainability (TfS) is a collaboration of more than 50 chemical companies that seeks to harmonize environmental, social, and governance standards across global chemical supply chains through shared supplier assessments, audits, and sustainability initiatives. Another type of collaboration, product swaps, involves competitors agreeing that one will sell the other’s product, ensuring that product is available to customers.
Additionally, collaboration on research and development, through joint ventures or other means, is not uncommon. Chemical companies continually innovate. Although cooperation among competitors is not inherent to all business dealings in the industry, cooperation among competitors may be necessary to facilitate innovation, as part of a joint venture or otherwise. In those circumstances, an agreement among competitors to set the price of or fix the terms on which they purchase a product may be appropriate.
Are these types of collaborations per se violations of antitrust law in the United States? Certainly not. Although the recent buyer cartel actions suggest caution in considering competitor collaborations, proper consideration and structuring of collaborations should not raise prohibitive liability risk.
The Ancillary Restraints Doctrine
Under the ancillary restraints doctrine, a restraint that might otherwise be condemned as a per se violation of Section 1 of the Sherman Act may instead be analyzed under the rule of reason when it is subordinate and collateral to a separate, legitimate business collaboration and is reasonably necessary to achieve that collaboration’s procompetitive objectives. The doctrine traces to United States v. Addyston Pipe, which considered the lawfulness of an agreement among pipemakers to a particular bid strategy that would guarantee that the agreed-upon pipemaker would win the bid.1 There, the Supreme Court adopted the opinion of the U.S. Court of Appeals for the Sixth Circuit, written by then-Judge William Howard Taft. Then-Judge Taft explained that a restraint may be lawful if it is ancillary to the main purpose of a lawful contract and necessary to protect the legitimate fruits of that contract. The doctrine recognizes that some degree of coordination among competitors may be required for a productive venture to function.
The Supreme Court has also cautioned that per se treatment is appropriate only when courts have enough experience with a type of restraint to conclude that it is almost always anticompetitive. That principle matters in industries where coordination can be necessary to generate output, innovation, or supply-chain efficiencies.
For many years, US companies looked to the DOJ and FTC’s 2000 Antitrust Guidelines for Collaborations Among Competitors,which recognized that competitor collaborations can be procompetitive, including where firms combine complementary capabilities, share risk, lower costs, increase output, improve quality, or accelerate innovation and described circumstances in which the agencies generally would analyze a collaboration under the rule of reason rather than condemn it categorically. The guidelines fit comfortably with the ancillary-restraints framework: the key questions were whether the restraint was reasonably related to a legitimate collaboration and whether it appeared reasonably necessary to achieve the collaboration’s procompetitive benefits. But in December 2024, the DOJ and FTC withdrew those guidelines, stating that they no longer provided reliable guidance about how the agencies assess competitor collaborations. The withdrawal does not mean the ancillary-restraints doctrine has been displaced; rather, it means that parties should ground their analysis in the Sherman Act, current case law, and the specific facts showing how the collaboration promotes competition.2
NCAA v. Alston illustrates the point. The plaintiffs challenged restrictions on compensation for college athletes—effectively, an agreement among universities purchasing labor. The Supreme Court declined to treat the agreement as per se illegal, relying on a nearly three-decade old Supreme Court decision in which the court concluded per se treatment was inappropriate because the college sports industry requires some coordination among participants to function. In Alston, the Supreme Court affirmed this reasoning, and added that courts should not deem conduct illegal per se unless they have sufficient experience with that type of restraint to predict confidently that it “would be invalidated in all or almost all instances.”3
Other lines of cases concern agreements among competitors not to hire one another’s employees. For instance, in Deslandes v. McDonald’s USA, LLC, the U.S. District Court for the Northern District of Illinois echoed the Supreme Court’s words in Alston, explaining that per se treatment should be rare and reserved for cases where the court has gathered significant expertise with the restraint in question. Although the court agreed that there was a horizontal agreement among purchasers of a good—in this case, labor—the court concluded that per se treatment was inappropriate because the restraint was ancillary to a franchise agreement, which had a procompetitive effect. Recently, a court reached the same conclusion about an agreement not to poach luxury retail employees from other retailers because “no-hire agreements are part of a larger legitimate business collaboration between Saks and the Brand Defendants,” and the business collaboration “allow[s] Saks stores to exist and the Brand Defendants to sell their products through a nationwide retailer.”
These cases tell us a few things.
First, per se treatment may be inappropriate in industries in which multiple firms sell the same products and so must cooperate—to some extent—to increase brand demand, like in sports leagues, where league members must cooperate on certain rules in order to maintain a league. In addition, in franchise industries, agreements among franchisees not to hire one another’s employees can prevent freeriding that occurs when certain franchisees train managers, and other franchisees under the same franchisor hire away those managers. Likewise, no-poach provisions can prevent hostility among franchises, allowing them to grow the brand together and for business collaborations wherein a supplier can distribute its products through a large retailer without fear of poaching.
The Ancillary Restraints Doctrine and Chemicals Industry Collaborations
Returning to the question at hand: Are all collaborations among competitors in the chemical industry per se violations of antitrust law in the United States?
The answer is no. A naked agreement to fix an input price, with no legitimate integration beyond the restraint itself, is likely to be unlawful per se. But that does not mean all competitor collaborations involving purchase terms, supply commitments, or cost-sharing should be treated the same way.
The chemical industry presents a strong case. Unlike the ethylene cartel, many collaborations involve genuine productive integration: product swaps that ensure supply continuity, joint purchasing arrangements that reduce procurement costs, and joint ventures that develop new processes or products neither party could efficiently create alone. Where an agreement on price or price-adjacent terms is subordinate to such a venture and reasonably necessary to make it work, courts should apply the rule of reason rather than condemn the arrangement categorically.
That approach better serves antitrust policy. Chemical production is capital-intensive, innovation-dependent, and globally competitive. Collaborations that reduce procurement costs, share investment risk, ensure supply security, or accelerate innovation can benefit downstream customers and consumers. Treating such collaborations as categorically unlawful simply because they involve some coordination on price-adjacent terms would chill productive activity that antitrust law should protect.
Getting to the Rule of Reason
Several practical steps can help parties show that a chemicals collaboration belongs under the rule of reason, rather than the per se rule.
Deal structuring
Deal structuring should begin with the proposition that any restraint on price or other competitive terms must be subordinate and collateral to a legitimate, procompetitive venture. In a product swap, joint purchasing arrangement, or innovation joint venture, the parties should be able to identify an independent business purpose for the collaboration apart from the restraint itself, such as ensuring supply, reducing procurement costs, sharing investment risk, or developing a new product or process.
Deal documentation
Contemporaneous documentation is critical to establishing the collaboration’s procompetitive rationale. The agreement and related approval materials should clearly articulate the legitimate business objectives, identify the capabilities or resources the parties are combining, and explain why each restrictive term is reasonably necessary to achieve those objectives.
Cataloging procompetitive benefits
Parties should identify and document the procompetitive benefits the collaboration is expected to produce and then track whether it actually produces them. Depending on the arrangement, those benefits may include cost reductions passed through to consumers, increased output, enhanced product quality, risk-sharing that enables investment in innovation, or entry into new markets.
Information exchange protocols
A collaboration’s information-exchange framework is often the feature that determines whether a venture will be treated as procompetitive coordination or as a mechanism for collusion. Parties should design protocols that limit the flow of competitively sensitive information—including pricing, costs, capacity, customer terms, and strategic plans—to what is strictly necessary for the venture to function. Where the collaboration requires access to such data, it should be channeled through designated personnel or independent third parties, with electronic and physical firewalls preventing operational decision-makers who set prices or terms in the parties’ independent businesses from accessing competitors’ confidential information.
Exit and termination planning
A procompetitive collaboration must not outlive its justification. The venture agreement should include clear termination triggers, sunset clauses, or periodic renewal requirements that force the parties to reassess whether the collaboration continues to produce the procompetitive benefits that warranted the restraint. Where market conditions change materially—for instance, where the parties’ combined purchasing share grows to a level that raises monopsony concerns, or where the original efficiency rationale is no longer operative—the agreement should provide a mechanism for narrowing or dissolving the arrangement.
Compliance audits
Ongoing compliance monitoring is necessary to ensure that the collaboration does not drift beyond its originally documented procompetitive purposes. Periodic audits should verify that information sharing remains within agreed boundaries, that pricing discussions do not extend beyond what is necessary for the venture, and that the collaboration continues to produce the benefits that justified the restraint.
1 175 U.S. 211 (1899).
2 On February 23, 2026, the DOJ and FTC launched a joint public inquiry under Docket No. ATR-2026-0001, seeking input on the “value and potential content of guidance concerning the range of collaborations utilized to drive innovation and promote competition in the modern economy.” The agencies are soliciting comment on topics including joint licensing arrangements, conditional dealing, algorithmic pricing, data and information sharing among competitors, labor-market collaborations, and other business models facilitated by emerging technologies. The original comment deadline of April 24, 2026 was extended to May 21, 2026. As of this writing, no draft replacement guidelines have been published; accordingly, practitioners advising on competitor collaborations must continue to rely on case-by-case analysis under the Sherman Act and FTC Act, informed by existing judicial precedent, pending issuance of any successor guidance.
3 Nat'l Collegiate Athletic Ass'n v. Alston, 594 U.S. 69, 89, 141 S. Ct. 2141, 2156, 210 L. Ed. 2d 314 (2021).
