Antitrust Law Daily EC conditionally approves BMW/Daimler joint ventures for car-sharing, ride-hailing
Wednesday, November 7, 2018

EC conditionally approves BMW/Daimler joint ventures for car-sharing, ride-hailing

By Jeffrey May, J.D.

Auto makers BMW AG and Daimler AG have been given the green light from the European Commission (EC) to proceed with a series of joint ventures that will bring together the two companies’ so-called mobility services. The joint ventures focus on five business fields: (1) free-floating car-sharing services, via DriveNow (BMW) and car2go (Daimler); (2) ride-hailing services; (3) parking services; (4) charging services; and (5) other on-demand mobility services. A sixth joint venture will manage the brands and license them out to the other five joint ventures, according to today’s EC announcement.

The EC’s investigation found that, in light of significant overlaps between the companies with respect to free-floating car sharing services, the proposed transaction would raise competition concerns for car sharing in six cities: Berlin, Cologne, Dusseldorf, Hamburg, Munich, and Vienna. In these cities the alternatives to car sharing would be limited. According to the EC, free-floating car sharing allows customers to pick up and drop off the car anywhere within a certain delimited area in a given city, using authorized parking spaces, such as public parking spots. The car can then be picked up by the next user in the location where the previous user parked it. The EC found that Daimler and BMW would have the ability and incentive, after the transaction, to shut out: (1) rival providers of integrator apps, to the benefit of Daimler's own integrator app "moovel"; and (2) rival car sharing providers, to the benefit of their own car sharing services.

Remedy package. The EC announced that, in order to resolve the competition concerns, Daimler and BMW offered, in the six relevant cities, a two-fold remedy package, granting: (1) application programming interface (API) access to third party aggregator platforms for mobility solutions, so that they can also re-direct users to Daimler and BMW's car sharing services; and (2) access to Daimler "moovel" integrator app to interested car sharing providers. The remedies are intended to reduce the barriers to entry for competing free-floating car sharing providers.

Promise of continuing competition. BMW and Daimler announced the planned partnership in March. In a blog post, Dieter Zetsche, Chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars, gave assurances that the companies will stay competitors in their respective core businesses. "With this move, two arch-rivals leverage competition and cooperation—at the same time," Zetsche said.

Cartel investigations. The EC announcement did not mention an ongoing investigation into collusion in the European auto industry. Earlier this year, the EC opened an in-depth investigation to determine whether BMW and Daimler, as well as VW Group (including Audi and Porsche), colluded in breach of European antitrust rules to avoid competition in the development and deployment of clean emissions technology. European Union Competition Commissioner Margrethe Vestager suggested that the purported collusion among the so-called Circle of Five, "may have denied consumers the opportunity to buy less polluting cars, despite the technology being available to manufacturers." In October 2017, the EC carried out inspections at the premises of BMW, Daimler, Volkswagen, and Audi in Germany.

Companies:BMW AG; Daimler AG

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