Crisis management in the automotive industry

    Berlin, June 08, 2020

    Bundeskartellamt defines important framework conditions for cooperation in supply chain

    The corona crisis has brought about large and unprecedented burdens on the automotive supply chain, caused by collapsing demand and the lockdown. This can make business very difficult for individual companies – through no fault of their own – and result in a situation that they cannot cope with without assistance.

    Today the Bundeskartellamt (German Federal Cartel Office) published a letter from its chairman on measures for pandemic crisis management in the automotive industry, which is intended to set out the framework conditions under competition law that apply to cooperation in principle within the industry and to cooperation on measures for reorganization in individual cases. The VDA welcomes the letter from the Bundeskartellamt. It provides legal security for the companies in this important field. On the one hand, this should create a framework for overarching cooperation in the industry, enabling coordination of aspects such as organizing the resumption of operation (e.g. regulations that relate to capacity bottlenecks and closure times). On the other hand, the individual measures mentioned should help accelerate the completion of reorganization. Participation in the individual measures is voluntary for the companies on both sides (creditors and debtors) – as has always been the case for reorganization.

    In the special situation surrounding the corona crisis, support for individual suppliers will require rapid, coordinated action on the part of their customers. The solution deemed positive by the Bundeskartellamt is the formation of stakeholder groups that can negotiate internally on specific contributions to remedial action.

    Support for suppliers in individual cases will require efficient balancing of the interests of the most varied stakeholder groups. Swift operative measures taken by manufacturers and suppliers will make a major contribution in the current crisis situation. Negotiation of the separate contributions of the stakeholders on an individual basis, as is usually the case, is often difficult when time is short owing to the overall economic crisis. By the time such negotiations have been completed, the company in crisis could already have folded or gone into insolvency. This is because the supplier’s customers would offer different solutions, forcing the supplier to go repeatedly from one customer to another to align the new proposals. The expedient solution is the formation (now made possible) of stakeholder groups that can negotiate the contributions among their members.

    The VDA expects that cooperation arrangements between OEMs and suppliers on individual supporting measures will help stabilize the automotive value chain.