GERMANY Trends and Developments Contributed by: Leif Gösta Gerling and Matthias Krämer, LPA
General Market Observations Since the outbreak of the war in Ukraine, and now even more so since the outbreak of the war in Gaza, there has been a rethinking and a socio-political change in the perception of the defensive capabilities of the Federal Republic of Germany and the Bundeswehr (the German military forces). In addition, considerable financial resources are being made available for mili - tary armament and the deterrence associated there - with, as well as for the modernisation of infrastructure (especially roads and railways but also bridges and communication lines) and state administration. This has led to not only public funds but also private capital becoming available to finance companies operating in these economic sectors or at least in sectors comple - mentary to them. Apart from the provision of capital, however, knowl - edge transfer is also a significant factor that has led to increased activities in these areas, not at least through the establishment of incorporated and unincorporat - ed joint ventures (JVs). In 2024, for example, German military equipment manufacturer Rheinmetall AG part - nered up with Leonardo S.p.A. and established a JV (Leonardo Rheinmetall Military Vehicle) for the manu - facturing of a new battle tank with equal representa - tion (both shareholders hold 50% of the voting rights of the JV) and with its headquarters in Rome. However, it is not only in the military and military-relat- ed sectors that an increase in JVs can be observed. Companies in the energy, healthcare, automotive, data processing and digitalisation industries are also pooling their capabilities and resources in JVs or based on collaboration and co-operation agreements. Examples include: • the establishment of a JV by BMW Group and Tata Technologies for the development of vehicle soft - ware in the areas of automated driving, infotain - ment and digital services; • the establishment of a JV by Volkswagen Group and Rivian for the development of state-of-the-art software and electronics architecture; and • the establishment of a JV in the area of the German H2-core network for the construction and financ - ing of pipelines, terminals and import infrastructure
between grid operators and manufacturing compa - nies. It is therefore apparent that bringing these factors together in a jointly founded company poses a real alternative for market participants, particularly in sec - tors where innovation and the development of new technologies are very capital-intensive and require a high degree of specialised knowledge. Even though this insight is not groundbreaking, and even though capital-intensive sectors and fields with a high degree of specialisation have always favoured the emergence of JVs, there has been a noticeable increase in part - nering up in these areas. There has been a slight increase in the number of JVs being established in high-growth sectors such as health technologies or artificial intelligence) as well. Finally, due to the increasing pace of innovation, there has also been a notable increase in established companies forming JVs with large corporations on the one hand, and with small, agile and flexible start-ups in highly specialised areas on the other. For start-ups, this means access to sufficient capital and other resources that are usually not available within their own companies, such as research facilities. In addition, partnering up with these corporations pro - vides for better access to networks and an increase in market reputation for their products and brands. For established companies, however, it leads to cost and time savings in developing their own expertise as well as access to specialised, cutting-edge technolo - gies and developments, which are often protected by industrial property rights. From a bird’s eye view, therefore, it is a classic win-win situation. Adapting the Legal Framework With the increase in cross-border JV formations, the relevant legal framework in Germany and Europe has also become more specific and, in some areas, more stringent. The focus here is particularly on antitrust and competition law, but also on foreign trade law regulations. Of course, there are several other legal and tax provisions that must be observed and com - plied with, but these are provisions of corporate, con - tract and tax law that apply indiscriminately and are based less on the fact that it is a JV and more on the chosen legal form or the economic sector in which
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