A Deal Forged in the Furnaces of Brussels

Earlier this week, German giant Daimler agreed to an equity swap arrangement with Franco-Japanese Renault-Nissan aimed at technology sharing as tougher emissions standards have forced automakers to reevaluate the composition of their fleets. The deal was particularly important for Daimler; If one disregards boutique and sportscar manufacturers, the Mercedes-maker currently ranks last among European automakers in emissions tests.

The link-up, though limited in scope, provides a great example of the impact rulemaking can have on corporate behavior; Daimler is famously protective of its technology, one of the factors that lead to the failure of its most famous merger. Therefore, many see the link-up as an admission by the firm that it would not be able to meet the EUs tougher standards alone. Emissions standards also notably provided one of the catalysts for the recent and ongoing drama between Porsche and Volkswagen.

Such deals could provide a blueprint for American makers as the Obama administration has, similarly to its EU counterpart, implemented higher emissions goals. Though the financial health of the companies can be likened to the physical health of Washington DC residents during the Cherry Blossom Festival, (emphasis on the pollen-inducing sneezing and headaches, not the flowers) continued government intervention makes it a virtual certainty that whoever is actually left of the Big Three will meet Washington's goals. As American makers are a step behind overseas counterparts, this could potentially come in the form of similar arrangements between US firms and foreign competitors in the future.