CADE conditionally clears a joint venture of firms in the automotive sector

On 14 December 2022, the Administrative Council for Economic Defense (CADE) conditionally cleared a joint venture among 11 companies in the automotive industry.

With the transaction, the companies Volkswagen, BMW, Mercedes-Benz, BASF, Bosch, Henkel, SAP, Schaeffler, Siemens, T-Systems, and ZF will establish an organisation for innovation and technological cooperation in the car market, with headquarters in Germany. Each firm will hold 9.1% of membership interests of the new organisation's share capital.

A joint ventureis a business agreement between two or more companies—from the same or different industries—aimed to establish a new economic agent without ending the original ones.

The firms’ agreement foresees the creation of a cloud-managed data network that is non-discriminatory, collaborative and of wide and open access to all players in the car industry—as well as to their respective partners that develop activities in the production chain—enabling data processing and improving decision-making.

The petitioners allege it will benefit every player that operates throughout the production chain of the automotive sector, increasing the efficiency in processes, improving the quality of products, and helping achieve sustainable goals.

In its analysis, the Office of the Superintendent General of CADE concluded that the companies do not undertake the activities aimed with the joint venture. Therefore, the transaction will not result in a market share increase. Besides, the new player's system solves market foreclosure concerns by being non-discriminatory and of broad access to all interested users.

The Tribunal, in its turn, recognised the existence of competition compliance safeguards, especially regarding the possible exchange of competitively sensitive information. 

According to Commissioner Gustavo Augusto, rapporteur of the case, the size of the deal makes it difficult to know which information competitors could effectively exchange: “In face of the uncertainty of which information will be exchanged, it is necessary to take measures that protect consumers and the market from potential harm”.

Thus, the Tribunal unanimously decided for the clearance of the case subject to remedies. In sum, the proposed remedies concern, amongst others, monitoring the information users exchange in the company’s systems, appointing a professional responsible for issuing protective rules and ascertaining complaints of antitrust violations, and developing and adopting a tracking software designed to find possible antitrust violations.

It is worth stressing CADE’s clearance of the case will regard only those companies adopting said remedies.

Access Case no. 08700.004293/2022-32.