OESA Regional Meeting – Chicago Automotive Supplier Industry Update

25 November 2013 Dashboard Insights Blog

Are you aware that General Motors (“GM”) issued new general terms and conditions (“Terms”) for direct material, customer care & aftersales, and tooling purchases effective for requests for quotation issued on or after July 15, 2013? You are in the Automotive Industry, you need to be. Are you aware that the DOJ continues to extract plea agreements from auto parts manufacturers and executives for price fixing conduct, in what DOJ describes as “the largest criminal investigation the Antitrust Division has ever pursued”? You are in the Automotive Industry, you need to be. Are you familiar with the most common pitfalls in contracting on your supplier agreements? If not, you better be. These topics detailed below along with others will be addressed in detail at the upcoming OESA Regional Meeting – Chicago Automotive Supplier Industry Update on December 5, 2013.

Auto suppliers continue to grapple with how to address GM’s new terms, which are the most extensive revisions to GM’s terms and conditions in years. The new terms and conditions include 40 provisions and reflect significant changes from prior iterations which, in many respects, alter the status quo. Provisions addressing warranties, quality, IP rights, duties to inform and audit rights are among the significant areas that GM has modified. Solutions addressing the changes need to be pragmatic.

Brandi Walkowiak will provide an overview of key changes to the most significant provisions. She’ll also discuss the implications of the revised terms and help suppliers think strategically about how to respond to these changes.

DOJ continues to extract plea agreements from auto parts manufacturers and executives for price fixing conduct, in what DOJ describes as “the largest criminal investigation the Antitrust Division has ever pursued.” With another round of plea agreements filed in late September 2013, twenty companies have now either pleaded or agreed to plead guilty, and have agreed to pay more than $1.6 billion in criminal fines.  Seventeen executives have already been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences. Other antitrust enforcement authorities around the world continue to investigate and prosecute related cartel conduct. A large civil Multi-District Litigation continues in federal court in the Eastern District of Michigan.

Greg Neppl will provide an update on the status of these prosecutions and implications for the auto parts supply industry.

When entering contracts, companies often make the mistake of not looking at each various stage of a contract to ensure success in the relationship from start to finish – and they all finish. The most diligent companies get their ducks in a row before they even begin contract negotiations. Of course, they pay the utmost attention to the negotiations themselves.  But, once the deal is closed, they make mistakes in the contract relationship. When they contract ends, just like with a divorce, the termination needs to be seen through until a complete break is made. In each of these stages, there are common and routine pitfalls that many companies fall into.

Jeff Soble will provide an update on some of the more common pitfalls that companies end up inside during the life of their supplier contracts.

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