Joint venture between KNDS, Rheinmetall and Thales cleared

The Bundeskartellamt has today cleared the formation of a joint venture between KNDS Deutschland GmbH & Co. KG, KNDS France, Rheinmetall Landsysteme GmbH and THALES SIX GTS France SAS. The joint venture, MGCS Project Company GmbH, will be headquartered in Germany. The main purpose of this Franco-German cooperation project is to develop the modular Main Ground Combat System (MGCS) battle tank on an industrial scale. The German and French governments will be the joint venture’s only customers.

Andreas Mundt, President of the Bundeskartellamt: “The geopolitical situation has a direct impact on the defence industry. We are seeing more and more cooperation projects between different European companies, which can also have effects on competition. An important aspect in assessing such projects is whether the companies involved would also be able to carry out the project in question if they acted on their own. Our investigations have shown that this is not the case here – in fact, Rheinmetall and KNDS’s previous activities are largely complementary. In addition, when it comes to developing and manufacturing armoured combat vehicles, the companies are in competition with other strong players.”

Rheinmetall is a globally active technology group operating in the defence industry and the automotive components market. KNDS is a Franco-German arms manufacturer formed by a merger between Krauss-Maffei Wegmann and the French defence firm Nexter. The French state has a stake in KNDS. Thales is a French multinational technology company operating worldwide and specialising in digital identity and security, defence and security, aerospace, and space.

The MGCS joint project does not aim to develop a conventional main battle tank, but a multi-platform system designed to deliver a whole set of capabilities. The system is to be based on an identical chassis which can carry different modules for different capabilities. Several such vehicles with different specialised capabilities are then intended to operate as a combined unit. This system is expected to replace the German LEOPARD 2 and the French LECLERC main battle tanks by the early 2040s. The formation of the joint venture represents the second phase in the development of the new MGCS system.

While Thales has not yet been active in the armoured combat vehicle (ACV) sector, there are some overlaps between the activities of Rheinmetall and KNDS in this field. However, due to the specificities of the market, which is mainly dominated by national tenders, these overlaps do not give rise to competition concerns. The main activities of the parties involved are largely complementary. With regard to entire ACV systems, the companies in question are in competition with other strong players. Moreover, the parties are expected to continue to compete with each other for other projects, particularly given the importance of the individual states as customers.