German Federal Cartel Office approves VW-Rivian joint venture

The transaction was approved under merger control because it was “not expected to significantly impede effective competition,” the German Federal Cartel Office announced. This applies “regardless of whether the relevant market is considered to encompass E/E architectures as a whole or various subsystems and subservices. There will continue to be a sufficient range of services available to car manufacturers to build E/E architectures,” the office continued. A significant weakening of innovation competition for E/E architectures is unlikely.

In late June, Volkswagen CEO Oliver Blume and Rivian founder RJ Scaringe formed a far-reaching software alliance. In this joint venture, the new partners want to create a new E/E architecture – based on Rivian’s existing software and electrical architecture – as a technology platform for software-defined vehicles. The new solution will be used in the upcoming SSP electric platform, which will be launched by the end of the decade (expected in 2028). For VW, this is a new attempt to catch up on software – the problems with the current software unit Cariad are well-known. However, access to Rivian’s technology comes with a (potentially) high price: According to the German carmaker, it will invest up to $3 billion in Rivian and up to $2 billion in the joint venture by 2026 – in each case depending on the achievement of certain milestones.

The German competition authorities have given it the green light. They also see “no reason to fear that competition in innovation in the E/E architecture will be significantly hindered.”

“In essence, the cooperation project is about how a large number of complex functions and components are best organised in cars and how they interact with each other,” says Andreas Mundt, President of the Bundeskartellamt. “As cars become increasingly digital and connected, the question of the right system architecture is nothing less than a key parameter for competition. When it comes to cooperation projects for the development of new products and technologies in key sectors, especially those involving large companies, we take a close look at the competition in terms of innovation. The project does not raise any concerns in this respect, nor does it raise any other serious competition concerns.”

The approval by the Federal Cartel Office in the third quarter fits in well with VW’s announced timeline. As announced in June, the joint venture is to be formally completed in the fourth quarter of 2024. By then, it will also be clear who will lead the joint venture: Each party will appoint a co-CEO. In the case of Rivian, this will also be the Chief Technology Officer (CTO), while in the case of Volkswagen, the co-CEO will also be responsible for operations (COO).

bundeskartellamt.de