How do companies work together

cooperation

Definition and meaning

By means of a cooperation agreement, various companies come together to pursue a common goal. Corresponding reasons include:

  • Better prices for joint orders (procurement area)
  • Merger in order to achieve the required company sizes (production area)
  • Larger budget for investments (financing area)
  • Expansion of the sales structures (sales area)
  • Implementation of development and research projects (research area)

As a cooperation partner, none of the companies involved lose their economic or legal independence.

What forms are there?

When companies conclude a cooperation agreement for a cooperation, it can be in the following forms:

  • Joint venture
  • Casual societies
  • Cartels
  • Interest groups

In the next few paragraphs, we will explain the special features of the individual types of cooperation and what you have to pay attention to with each one.

1. Casual society

This is called a merger that takes place for the simple reason that your own resources and funds are not sufficient for the successful implementation of a project. This drastically reduces both costs and risks and distributes them to the individual partners. In the case of cooperation in the form of a casual society, it is usually a society under civil law.

Companies that opt ​​for a casual society usually design it as a Consortium. The associated projects are usually limited in terms of content as well as temporarily - and so is the collaboration. If the task is completed successfully, the community also expires.

The advantage of a cooperation in the form of a working group is that the participating companies appear as a group. You are therefore not individually liable, but only as a group. This is called a real working group. See fig. 1:

Fig. 1: Real working group

Parallel to this, there are “fake” working groups. These can come in two forms (see Figure 2):

  1. The cooperation exists between the client and a main company. If their own resources are not sufficient, the company undertakes to outsource part of the order. A fake working community is created between the main company and the associated subsidiary companies. A legal relationship exists between the client and all companies involved.
  2. There is also the option of concluding a contract between the client and the general contractor. Even if this further subcontractor hires to complete the project successfully, a legal relationship only exists between the client and the general contractor as well as between the general contractor and the subcontractors.

Both models are commonly referred to as indoor society.

Fig. 2: Fake working group

2. Interest group

This is an open-ended cooperation. It is neither limited in time nor project-dependent. Instead, it is designed for long-term collaboration. One possible reason for forming a community of interests is to reduce costs. Similar to a working group or internal company, outsiders cannot see which companies are working together. The company itself does not conclude its own contracts or invoices. You do not have to have your own business assets. However, a joint administration can be used, which is responsible for the areas of responsibility specified in the articles of association.

A closer form of cooperation can be realized if the profits and losses of the companies involved are recorded together and allocated to the individual companies according to a specific, fixed key. In this case one speaks of a profit and loss community or a community of interests in the narrower sense.

3. Cartels

Mergers of companies with the aim or result of restricting competition are known as cartels. The restraint of competition has such an effect that the companies jointly have such market power that competition on the market is no longer or hardly possible. The cartel, which also appears as a society under civil law, is not visible to the outside world.

There are different types of cartels, depending on which cooperation agreements the merged companies have concluded. In the case of price agreements (e.g. unit, minimum, maximum price), one speaks, for example, of a Price cartel. Even with the spatial division of sales or procurement markets by the companies involved (Territorial Cartel) or if a single company takes over the entire sales or the entire procurement (syndicate), it is a cartel. If the companies agree on the uniform design of individual parts or end products, one speaks of Standard and type cartels.

The formation of cartels is prohibited; it violates Section 1 of the Act against Restraints of Competition (GWB). This general ban on cartels applies to certain areas of the economy, such as B. Agriculture, copyright collecting societies and the central marketing of rights to the television marketing of sporting events are not (§§ 28, 30, 31 GWB). In addition, the ban can be temporarily lifted either by the Federal Cartel Office or the Federal Minister of Economics.

4. Joint ventures

A joint venture or joint venture is created when a legally independent company is founded by several companies that jointly take over management. In contrast to cooperations such as working groups, interest groups and cartels, in which only contractual agreements are made, the companies within the framework of joint ventures also participate in the capital of the joint venture. As a rule, the shares are evenly distributed among the individual shareholder companies.

Joint ventures are often set up for foreign investments, as in many countries there are restrictions on the participation of foreigners in national companies and cooperation with domestic companies is required.