Automotive Industry and Markets

Coronavirus-Bulletin

Here you will find recent news regarding the effects of COVID-19 on the automotive industry.

Corona-Crisis: Federal Cartel Office issues important framework conditions for joint crisis management in the automotive industry

The automotive industry suffers substantially from critical effects of the actual corona crisis. This is true for the manufacturers as well for the many companies of the supply chain. Due to the sudden breakdown of demand for cars the companies may find themselves in a very difficult economic situation, which they are not responsible for, and which may deteriorate on a permanent basis.

Since the beginning of the crisis VDA has been in contact  with the Federal Government and other public authorities. Our purpose is to create framework conditions which shall support the automotive industry to overcome the partly dramatic effects of the crisis. One of the most relevant contacts was established with the Federal Cartel Office about the question of permissable cooperations under competition law. This is related to the cooperation within the industry regarding the restart of the production after the shut-down (“basic cooperation) and to a process of restructuring of suppliers in pre-insolvency cases (case-by-case cooperation).

The enabling of such cooperations is an important element to mitigate the effects of the crisis. Furthermore the industry is worried about problems which may occur during the restart of production, which is expected to take place soon. The problems result from the financial crisis of the companies and unavoidable obstacles of the restart of complex supply chains due to process-technical and coordinating requirements.

Two aspects are of particular impartance: First, due to the far reaching scope of the crisis the effects may become visible later, and thus lead to high pressure timewise and regarding safeguard measures. Second, the companies affected are not able to solve these problems by themselves alone. Members of the complex automotive network of international supply chains are affected by different state measures, but also different lock-times for the production by the suppliers and the manufacturers.

The Federal Cartel Office has issued on 09-06-2020 a „Vorsitzendenschreiben“ (comfort letter; see enclosure). This letter shall provide for the companies of the automotive industry both aforementioned forms of cooperation (Basic and individual measures) for a limited time frame. At the same time it clarifies the boundaries of competition law which have to be observed. This ruling is effective until the end of the year.

The implementation is enacted by the companies of the automotive industry. VDA assured the Federal Cartel Office, that it will inform its members directly as well as all interested companies by putting all relevant documents on its website. The documents in question are the comfort letter, two presentations which were prepared for the discussions with the Cartel Office (pandemic measures and case study), which may be used for a better understanding of the comfort letter.

Furthermore the cartel office and VDA agreed on a regular exchange about the experience and potential problems of the implementation of the cooperations. For a basis the companies are asked to inform the VDA with a reporting list (see enclosure) about all pre-insolvency measures, which are processed according to the individual cooperations scheme.

Requests for information about these coordination measures may be directed at the VDA legal department (Mr. Dr. Ralf Scheibach - Tel. 030-897842-260; ralf.scheibach@vda.de ).

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