Beyond the pandemic: rethinking the supply chain
To increase efficiency, enhance digitisation, reduce the risk of disruption and compliance violations, or even further sustainability objectives, manufacturers are increasingly seeking to collaborate with suppliers, tech companies and even competitors.
However, in doing so, manufacturers must always remain mindful of the potential antitrust and IP risks they face.
Manufacturers wishing to work with a technology provider on a bespoke supply chain application will need to ensure that they acquire sufficient control/access to any IP or know-how generated by the collaboration.
In particular, manufacturers should look at how ‘ownership’ of output data (eg the output of an algorithm that combines input data from the manufacturer with external/publicly available data) is contractually allocated between themselves and the technology provider, and to what extent third parties (eg other customers of the technology provider) will have access to such data.
In doing so, all parties will need to be mindful of antitrust considerations. While such collaborations can have pro-competitive effects, a considered assessment of the risks – as well as ensuring appropriate information-sharing safeguards are in place – are vital.
When considering so-called ‘crisis cartels’ – where competitors collaborate to rectify a perceived market failure in times of crisis – regulators are keen to avoid any suggestion that competition rules can be ‘relaxed’.
Amid COVID-19, governments have been looking to support affected economies and several competition authorities have published exceptional guidance on collaborations that ensure essential supplies.
The message remains clear though: manufacturers and their vertically related supply chain partners must still collaborate in compliance with antitrust laws, including by implementing appropriate information-sharing safeguards.
The European Commission recognises that EU policies – including competition policy – can help achieve its aim to make the EU's economy more sustainable (its so-called 'Green Deal').
This has sparked a debate around how manufacturers should comply with sustainability (ie ESG) objectives, including in their supply chains.
While collaboration on sustainability matters can lead to social and environmental benefits, it may not sit well with current antitrust laws and guidance. So caution should be exercised when discussing sustainability objectives, as the conversation can easily veer into competitively sensitive areas.
For more on ‘green’ competition law, read our blog.
Advising the Volkswagen Group of America on its joint venture with QuantumScape, a California-based company focused on the development of solid-state battery technology.
The arrangement will provide a road map to industrial-level production of solid-state batteries. Plans for a pilot plant are expected to be firmed up by the JV partners during 2020. On announcing the deal, VW said: ‘We are securing our global supply base with efficient producers, gradually building up manufacturing capacities and driving the development of cutting-edge solid-state battery technology. Our focus in this context is on long-term strategic partnerships’.
Rethinking the supply chain
- Why supply chains are on the agenda
- Supply-chain legal issues
- Technology and data
- Regulatory compliance
- Renegotiating long-term contracts
- Informal renegotiation
- Contract-renegotiation law in nine key jurisdictions – a summary