Crisis management measures in the automotive industry - Bundeskartellamt supports the German Association of the Automotive Industry (VDA) in developing framework conditions under competition law aspects

The German Association of the Automotive Industry (VDA) has presented measures for overcoming the challenges caused by the Covid-19 pandemic in the automotive industry to the Bundeskartellamt. The Bundeskartellamt discussed these measures with the VDA and decided, within its scope of discretion, to refrain from examination under competition law in more detail. The authority has informed the European Commission about its talks with the VDA and its assessment of the project.

Andreas Mundt, President of the Bundeskartellamt: “We support crisis management initiatives within the framework of competition law. The automotive industry is planning a number of measures to ease the economic consequences of the Covid-19 pandemic. In the complex supply chains, downtimes at individual sub-suppliers can cause even more economic harm by considerably delaying the restart of production processes at many suppliers and manufacturers. To overcome such problems in a specific sector a coordinated approach can be justified. However, such measures must comply with competition law requirements and be explicitly limited to a certain period of time.”

The measures presented by the VDA contain framework conditions for restarting automotive production and a model for restructuring suppliers.

The VDA would like to publish information on the re-opening times of automotive manufacturers and suppliers and a best practice guide explaining ways to avoid a misallocation of resources at a time when capacities are scarce.

The proposed “Corona restructuring process” is to enable a speedy restructuring process for companies, which are undergoing an economic crisis during the Covid-19 pandemic. As key elements of the process, the companies concerned will set up stakeholder groups and exchange information within and between the stakeholder groups over a limited period of time. Owners, employees, customers, creditors and public authorities would be able to exchange information on the solvency, credits, aid measures or operational problems of a company and quickly develop effective restructuring measures together.

Together with the VDA, the Bundeskartellamt has provided for some accompanying measures to ensure compliance with competition law requirements. These include in particular the following aspects:

• The relevant suppliers in the automotive industry remain free to choose when and in what way they would like to restart their activities and whether they would like to publicly announce this restart. In particular, they are not obliged to restart their production at a specified point in time.
• The VDA best practice guide will not contain any company-specific information relating, for example, to amounts of goods or contracts. Existing contractual obligations remain unaffected. Suppliers are not obliged to adhere to specific supply volume requirements.
• The proposed Corona restructuring process concerns companies, which in their own assessment are undergoing an economic crisis due to the Covid-19 pandemic and would like to resort to the restructuring process. This covers companies domiciled in Germany and companies outside Germany whose subsidiaries or establishments located in Germany are in crisis.
• The Corona restructuring process is limited in time. It is available to companies, which set the date for the first stakeholder meeting to take place before 31 December 2020, at the latest, and send out invitations to this meeting before the end of the year.
• The scope of the information exchanged between the parties to the Corona restructuring process is limited to data, which are indispensable for restructuring.
• Data exchange is subject to specific confidentiality rules and limited to a specified group of persons within the companies who are subject to confidentiality obligations and who, for a specific period of time, may not participate in purchasing negotiations with the relevant supplier.
• Data have to be exchanged in aggregate form. This applies in particular where information about the number of units or unit prices is shared. Companies will thus not receive any data specific to their competitors, but only overall figures of the relevant supplier.
• The Corona restructuring process will end upon conclusion of a framework agreement describing the stakeholders’ contributions in a general way. The individual services relating to each contractual partner are negotiated exclusively on a bilateral basis between the sub-supplier and the relevant stakeholder.
• Each stakeholder is free to choose not to participate in the restructuring negotiations or to reject the result of the negotiations. The parties to the framework agreement may not agree to disadvantage stakeholders that are not a party to the agreement.

The Bundeskartellamt assumes that the restructuring negotiations will be concluded before the end of 2021.

The VDA will keep the Bundeskartellamt informed about further developments. The Bundeskartellamt reserves the right to examine the matter in more detail in the event of complaints or other new findings.