German Federal Cartel Office Supports Cooperation with Competitors for 'Coronavirus Restructuring'

The automotive industry shows that cooperation with competitors in order to deal with the difficulties caused by the coronavirus pandemic in a coordinated manner is possible in accordance with antitrust law. Their admissibility can ‑ as an accompanying measure ‑ be coordinated with the cartel authority.

Companies are struggling with the economic consequences of the coronavirus pandemic. Generally, they do this alone, in coordination with their customers, suppliers and banks. They shy away from cooperation with competitors, as cooperation can be associated with antitrust risks. A large potential for crisis management thus remains unused, because no one knows the entrepreneurial challenges and the actual economic effects of the coronavirus pandemic better than the competition.

The automotive industry demonstrates now how the economic consequences of the coronavirus pandemic can be cushioned by a cooperation of competitors across industries, with the approval of the cartel authority. The Federal Cartel Office supports

Measures for a coordinated resumption of automotive production. In order to establish the framework conditions for a restart of production, for example the re-opening dates of car manufacturers and tier 1 suppliers are planned to be published on an association website. A best practice guide will propose industry-wide measures to avoid misallocation of resources.
A model for the coordinated restructuring of suppliers. The focus is on the formation of stakeholder groups of a supplier threatened by the crisis. Customers of this supplier can then share information among themselves and with other stakeholders (owners, banks) about the liquidity, credits, aid measures or even operational problems of a company and develop effective restructuring measures in a short time.

Accompanying measures are intended to ensure that this industry-wide cooperation between competing companies is admissible under antitrust law. They include in particular

Their temporary nature. The cooperation between competitors is limited in time to the phase of coping with effects of the coronavirus crisis.
The principle of voluntariness. Manufacturers remain free to decide when and to what extent to resume production. Suppliers are not obliged ‑ beyond existing contractual obligations ‑ to reach certain delivery volumes.
No exchange of company-specific competition-related information. Data may be exchanged in aggregated form. The same applies to the disclosure of part prices and quantities.
The formation of Clean Teams. The exchange of information is limited to certain persons within the companies who are subject to confidentiality obligations and are not allowed to participate in purchasing negotiations with the respective supplier for a certain period of time.
The establishment of Chinese Walls, especially with regard to distribution.

The coronavirus does not give a carte blanche for restrictions of competition. So, please, no flying blind through antitrust issues. Still, the courage to cooperate with competitors in a controlled manner can be worthwhile. Such cooperation can significantly strengthen the own efforts to cope with the economic consequences of the coronavirus.

Dr Christian Heinichen

Christoph Heinrich