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Daimler in partnership with Russian producer of military equipment
The European Commission approved the joint venture, says not in breach of EU sanctions against Russia
Daimler will help Russia to make heavy and light trucks. Photo EPA / BGNES
Brussels | 25/02/2015
German automotive company Daimler AG will help its Russian analogue Kamaz OJSC make light and heavy trucks. European Commission approves joint ventures between them. “Kamaz”, however, is part of the Russian military-industrial complex and producer of some of the military equipment, which Russia tore Crimea and Donbas from Ukraine.
The European Commission announced yesterday that it has approved a joint venture between the two companies under the EU Merger Regulation.
Message indicates that the objects of the Daimler is the development, production and sale of passenger cars, trucks, vans and buses.
Kamaz manufactures trucks, trailers, tractors, chassis, engines, power units and versatile armored vehicles. Some examples you can see here.
The joint venture will produce light and heavy trucks, and will weld and paint booths for them.
“Study Commission found that the proposed acquisition does not raise issues related to competition, as the joint venture will be active only in Russia and Belarus,” the commission said.
“The analysis of the merger is based only on the merits of the proposed transaction and independent of political influence,” said Club Z in a Commission spokesman, asked to comment on the deal.
“None of the existing measures of EU sanctions against Russia would not seem to affect this case.”
Sectoral sanctions, the EU has adopted against Russia last year, however, provide “a ban on exports of dual-use goods and technologies for military use in Russia or Russian military end-users.”
They include an embargo on trade in arms and military equipment to Russia.
Produced by KAMAZ heavy trucks and engines have both civilian and military use. “Daimler” will contribute just for this production.
EU sanctions already questioned agreed before them military supplies from Member States of the EU and NATO to Russia. These include two French helicopter class “Mistral” and and Italian armored vehicles with off-road
Ukraine says Daimler-Kamaz deal contradicts the spirit of EU sanctions
On 24 February, the Commission announced it has approved the creation of a joint venture by Daimler AG, of Germany, and Kamaz OJSC, of Russia. But in fact Kamaz is a firm primarily dealing with military equipment. A catalogue of some of the military production of Kamaz can be seen here.
The Commission doesn’t find that the merger contradicts the the sanctions adopted by the EU vis-a-vis Russia, in the context of the annexation of Crimea and the Ukraine crisis.
These restrictive measures include an embargo on the import and export of arms and related material from/to Russia, covering all items on the EU common military list.
“There is not a prohibition on the formation of mergers or joint ventures by EU entities where the merged entity operates in Russia and is active in the area of dual use goods and technology for military use or to Russian military end-users,” a Commission official told EurActiv. He all but confirmed that EU policies prohibit selling weapons to Russia, but allow those to be produced by EU firms working as joint venture in Russia.
EurActiv was informed that Ukraine had consequently protested against the merger. According to the official note, Ukraine doesn’t question the legality of the merger from the point of view of EU competition law, but finds that it contradicts the spirit of sanctions.
“In addition, the decision will be actively exploited by the Russian propaganda campaign to discredit the resolve and effectiveness of the EU efforts to oppose Russia’s course toward Ukraine by means of economic pressure,” the Ukrainian note says.
A more vigorous and thorough examination of all aspects of the proposed joint venture should be carried out by the competent EU institutions and its member states, Ukraine suggests. Kyiv also warns the Commission against creating “a false impression of appeasing or encouraging the aggressor in its illegal and immoral actions against Ukraine”.
European Commission approves KamAZ-Daimler joint venture
As noted in the press release of the European Commission, Daimler actively works in the development, production and sales of automotive products. The company produces mostly cars, trucks, vans and buses. KamAZ actively develops the production of trucks, trailers, tractors, chassis, engines and power units.
The joint venture will be active in the production of light and heavy trucks, and in the welding and painting of truck cabins. The Commission’s investigation found that the proposed acquisition will not raise any competition concerns, because the joint venture will only be active in Russia and Belarus.
In 2009, Daimler and KamAZ already entered into an agreement to create a joint venture for the production and sale of cargo vehicles. Both sides hold 50 percent of shares in the partnership. The European Commission also said no joint project between EU and Russia had been suspended because of the sanctions.