Wire harnesses have already been subject of a cartel decision. However, this time they are subject of a legitimate cooperation. Last month, the German Federal Cartel Office (FCO) declared that it has no objections to a cooperation organized by the “Arena2036 Research Campus”, which aims at standardizing the production of wire harnesses. While the FCO’s press release about the project appears to focus on the specifics of the relevant product and cooperation, a closer examination also reveals more general principles which provide valuable guidance when dealing with cooperations.
Cooperation is great – isn’t it?
The number of cooperations among competitors has significantly increased in the recent past (as previously mentioned on this blog, see here and here). This does not surprise, in particular with respect to the automotive industry, which faces tremendous challenges and undergoes a transition process (maybe) never seen before. This process includes mega-trends and evolvements such as autonomous driving, electrification, digitalization (including the shift from hardware to software), as well as other obstacles that come with the ever-advancing globalization and international competition.
Addressing these challenges can, in certain instances, work better in a group, as time, effort and expenses are spread on several shoulders. Especially if, as in the case at hand, standardization is one of the main purposes of an initiative it can – for obvious reasons – make sense to develop the standardized product together with other market players.
Standardization of wire harness production predestined for cooperation
The cooperation concerned the standardization of the production of wire harnesses (dt. Kabelbäume), in particular the introduction of certain DIN-standards. Wire harnesses are one of the most complex and therefore comparatively expensive components in vehicle production, which – considering the transition process of the automotive industry – become increasingly important. Almost every model and equipment/feature has its own special wire harness. Streamlining and standardizing their production process could allow robotic engineering to be used more frequently and would thus result in an appreciable reduction of production costs.
It does thus not come as a surprise, that members of the “Arena2036 Research Campus” such as the OEMs BMW and Mercedes-Benz, suppliers such as Bosch and Siemens, but also, for example, the industrial robot specialist Kuka, have assessed the development and standardization of wire harnesses production as an initiative worth pursuing, that would be best addressed by a group of companies from the automotive industry. The initiative was even supported by the German Federal Ministry of Education and Research, which is not uncommon in such cases.
Key Takeaways
Although the case deals with a specific cooperation agreement, it provides for some valuable takeaways:
- First: One should be aware that cooperation agreements can encompass various aspects, such as R&D, standardization, or specialization. Thus, when evaluating a cooperation initiative, it should be made sure that these various forms of cooperation are not mixed. Rather, the cooperation should be “salami-sliced” and each aspect be assessed under the respective criteria foreseen e.g. in the applicable block exemption regulation or Article 101 (3) TFEU.
- Second: The involvement of public authorities does not automatically guarantee conformity with antitrust law. A “lessons-learnt” that cannot only be derived from the case at hand, but is also addressed by the European Commission in its (still relatively new) Horizontal Guidelines where the Commission states that “the fact that public authorities encourage in horizontal co-operation agreements does not mean that it is permissible under Article 101” (para 22). This circumstance became evident here, as, although the German Federal Ministry of Education and Research being a sponsor of the initiative, the FCO initially expressed reservations about the cooperation.
- Third: The FCO made clear that, in exercising its discretionary powers, it will not object to other parts of the project, “for the time being”. This shall not only remind the parties of the fact that the FCO can scrutinize the cooperation project again if circumstances change but also emphasizes that it is the parties’ obligation to constantly assess and ensure that their cooperation applies for justification under the respective block exemption regulation or according to Article 101 (3) TFEU. This also includes the parties’ obligation to strictly limit the information exchange to information necessary for the specific cooperation.
- Lastly: The case at hand has – once again – demonstrated that timely consultation and involvement of the FCO can be of major importance and benefit to the parties. Receiving guidance from the FCO at an early stage helps structure and design the envisaged cooperation in a way that aligns with the standards sought by the FCO. The President of the FCO, Andreas Mundt, has emphasized, that “competition law does not stand in the way of such projects”, thereby referring to projects in which companies agree on shared norms and standards. This further underscores the regulator’s willingness to be supportive of cooperations – in particular in these challenging times.
Photo by Vlad Hilitanu on Unsplash
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