Advanced

EU Competition Law in the Automotive Industry

Bildtsén, David (2010) JURM01 20101
Department of Law
Abstract
The automotive industry is an oligopoly and the ten largest manufacturers account for close to 80% of the overall global production. The major markets of Europe, Japan and North America, have stagnated and remain stable and this has transformed the industry into a business of high costs and low margins. Somewhat ironically, as an attempt to increase the margins and adapt to the Japanese theory of lean production, car manufacturing suffers from severe overcapacity as a result of improved efficiency even though the barriers to entry are very high. This combined with a lack of potential competition results in tie-ups, joint ventures and other alliances as well as the struggle to balance large-scale production with product diversity. For... (More)
The automotive industry is an oligopoly and the ten largest manufacturers account for close to 80% of the overall global production. The major markets of Europe, Japan and North America, have stagnated and remain stable and this has transformed the industry into a business of high costs and low margins. Somewhat ironically, as an attempt to increase the margins and adapt to the Japanese theory of lean production, car manufacturing suffers from severe overcapacity as a result of improved efficiency even though the barriers to entry are very high. This combined with a lack of potential competition results in tie-ups, joint ventures and other alliances as well as the struggle to balance large-scale production with product diversity. For this study, forms of cooperation above are gathered under the umbrella of mergers, the term used below.

Mergers appear to be successful compared to other forms of cooperation especially when it comes to trades condensed to geographical areas and also for establishment and penetration of new markets. The former is predicted and the latter was one of the underlying motives behind the enormous Daimler-Chrysler merger. So far, mergers appear to suite the automotive industry well. Or, do they?

On the other hand, research has shown that mergers often fail due to unclear or hidden motives behind the cooperation, lack of trust on the undertakings involved, opportunistic behaviour, and incorrect selection of form for the cooperation or miss-recruitment to the new organization. The problem is not the concept of merger itself, but the later implementation on the following stages. This will be further elaborated below.

The overall purpose with mergers is to strengthen the competitive ability for the participating undertakings. Mergers are rarely aimed at general targets, but more frequently concentrated on specific parts of them. The cooperation is often directed towards an application, for example the development of a new car rather than the core competence itself.

Economies of scale are good, but is merger the road to success? Minnie in Disney’s cars asked for directions. The question is whether anyone knows where to go. (Less)
Abstract (Swedish)
Bilindustrin är en oligopolmarknad där de tio största tillverkarna står för 80% av världens totala produktion. De stora marknaderna Europa, Japan och Nordamerika har stagnerat och stabiliserats, vilket har förändrat branschen till en med höga fasta kostnader och låga marginaler. Försöket att öka marginalerna och anpassa sig till den japanska teorin “lean production” med kort ledtider i fabriken leder till att bilindustrin lider av en kraftig överproduktion som ett direkt resultat av den ökade effektiviteten. Detta trots att möjligheterna till nyetablering i industrin anses små.

I kombination med avsaknad av potentiell konkurrens resulterar det i att aktörerna knyter band genom samgåenden, uppköp och andra strategiska allianser för att... (More)
Bilindustrin är en oligopolmarknad där de tio största tillverkarna står för 80% av världens totala produktion. De stora marknaderna Europa, Japan och Nordamerika har stagnerat och stabiliserats, vilket har förändrat branschen till en med höga fasta kostnader och låga marginaler. Försöket att öka marginalerna och anpassa sig till den japanska teorin “lean production” med kort ledtider i fabriken leder till att bilindustrin lider av en kraftig överproduktion som ett direkt resultat av den ökade effektiviteten. Detta trots att möjligheterna till nyetablering i industrin anses små.

I kombination med avsaknad av potentiell konkurrens resulterar det i att aktörerna knyter band genom samgåenden, uppköp och andra strategiska allianser för att nå volymer samtidigt som strävan att diversifiera de då alltmer lika produkterna inleds. I den här studien samlas alla typer av samarbeten och allianser under termen samgåenden (mergers).

Samgåenden förefaller lyckade jämfört med andra former av samarbeten och då i synnerhet när det gäller riktade insatser mot en viss geografisk marknad eller etablering på nya marknader, vilket var ett av de underliggande motiven i det stora samgåendet mellan Daimler och Chrysler. Samgåenden verkar passa bilindustrin väl i dess jakt på volymer och reduktion av utvecklingskostnader, eller gör de?

Å andra sidan, har en närmare granskning visat att samgåenden ofta misslyckas som ett direkt resultat av oklara eller rentav dolda motiv, avsaknad av förtroende mellan parterna, alltför optimistiska visioner, felaktigt val av samarbetsform eller felrekryteringar i den nya organisationen. Problemet är inte direkt relaterat till konceptet samgående i sak, utan hur det senare implementeras. Ämnet kommer att behandlas närmare nedan.

Det övergripande syftet med samgåenden är att stärka konkurrensförmågan för de inblandade parterna. Samgåenden är sällan inriktade på generella insatser utan ofta på en viss marknad eller utveckling av en specifik bil snarare än samgående av bolagens respektive kärnverksamheter.

Skalfördelar är nödvändiga, men är samgåenden vägen till framgång? Minny i Disney’s Bilar frågade om en vägbeskrivning, men frågan är om någon verkligen vet den bästa vägen till framgång. (Less)
Please use this url to cite or link to this publication:
author
Bildtsén, David
supervisor
organization
course
JURM01 20101
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Konkurrensrätt, EG-rätt
language
English
id
1628116
date added to LUP
2010-07-13 18:18:09
date last changed
2010-07-13 18:18:09
@misc{1628116,
  abstract     = {The automotive industry is an oligopoly and the ten largest manufacturers account for close to 80% of the overall global production. The major markets of Europe, Japan and North America, have stagnated and remain stable and this has transformed the industry into a business of high costs and low margins. Somewhat ironically, as an attempt to increase the margins and adapt to the Japanese theory of lean production, car manufacturing suffers from severe overcapacity as a result of improved efficiency even though the barriers to entry are very high.  This combined with a lack of potential competition results in tie-ups, joint ventures and other alliances as well as the struggle to balance large-scale production with product diversity.  For this study, forms of cooperation above are gathered under the umbrella of mergers, the term used below.

Mergers appear to be successful compared to other forms of cooperation especially when it comes to trades condensed to geographical areas and also for establishment and penetration of new markets.   The former is predicted and the latter was one of the underlying motives behind the enormous Daimler-Chrysler merger.  So far, mergers appear to suite the automotive industry well. Or, do they?

On the other hand, research has shown that mergers often fail due to unclear or hidden motives behind the cooperation, lack of trust on the undertakings involved, opportunistic behaviour, and incorrect selection of form for the cooperation or miss-recruitment to the new organization.  The problem is not the concept of merger itself, but the later implementation on the following stages. This will be further elaborated below.

The overall purpose with mergers is to strengthen the competitive ability for the participating undertakings. Mergers are rarely aimed at general targets, but more frequently concentrated on specific parts of them. The cooperation is often directed towards an application, for example the development of a new car rather than the core competence itself.  

Economies of scale are good, but is merger the road to success? Minnie in Disney’s cars asked for directions. The question is whether anyone knows where to go.},
  author       = {Bildtsén, David},
  keyword      = {Konkurrensrätt,EG-rätt},
  language     = {eng},
  note         = {Student Paper},
  title        = {EU Competition Law in the Automotive Industry},
  year         = {2010},
}