Breathing space: an Airbus worker on a ventilators production line in April 2020
Breathing space: an Airbus worker on a ventilators production line in April 2020 © Bloomberg

As it became increasingly clear that ventilators would be crucial to fight the spread of Covid-19, British engineering multinational Smiths Group decided to step up.

The UK’s public health service, the NHS, had access to around 8,000 ventilators in March when coronavirus cases surged, but modelling predicted that a further 22,000 would be needed. Smiths’ medical technology division was the only UK-based maker of transportable ventilators, but at a rate that would have taken years to meet demand.

Enter companies such as Rolls-Royce, GKN Aerospace, Airbus and many others across the UK, which offered to hand over some of their manufacturing facilities, components and logistics to meet the challenge. The VentilatorChallengeUK consortium was born. Yet without the work of their in-house legal teams, the collaboration’s good intentions could have turned out quite differently.

“The aim was to ensure production could begin without delay, and that the consortium was quickly brought together . . . to ensure that all interests were represented in negotiations with the UK government,” says James Down, corporate general counsel at Smiths.

They were driven by a sense of common purpose that felt unique, he says. At the same time, “we had to ensure the consortium was legally robust in terms of meeting overall legal standards and that all future liabilities, including appropriate risk-sharing, had been considered for all the businesses involved”.

The last time Smiths, Rolls-Royce and GKN had pulled together for a common cause was as part of a second world war partnership working flat out on making Spitfires, says Mr Down. “I like to think that we showed some of that grit and determination in our work for this project.”

Even with such a worthy goal, the legal challenges involved in disparate engineering companies working at great pace were many.

GKN Aerospace and Rolls-Royce sites had to be approved by the regulator to make ventilators. Risk had to be shared by consortium members, since most of the parties were acting outside their usual areas of expertise in a highly regulated environment. Antitrust considerations had to be in place to protect trade secrets. Non-disclosure agreements, supply agreements, government contracts, quality assurances and training schedules all had to be managed in a way that did not slow the supply of the ventilators — all while operating in the middle of a nationwide lockdown.

“Everyone needed to ensure their organisation was protected from a risk perspective, [but] it never felt like we were negotiating against each other,” says Mr Down.

While the urgent task of tackling Covid-19 created the most pressing need for rivals to work together, other collaborations have been exploring how to join forces.

The UK’s mobile network operators are known for their arch-rivalry. So the Shared Rural Network, a collaboration between Vodafone, O2, EE and Three, marks a breakthrough — albeit after the government threatened to impose a solution. It will extend mobile phone reception into hard-to-reach and sparsely-populated areas.

Coverage in rural locations has always been a challenge for network providers. With too few customers to make rolling out infrastructure viable, they are often also hilly, which makes line-of-sight towers difficult to place — think of the Brecon Beacons in South Wales or the Highlands in Scotland. When networks are rolled out in underpopulated areas, “you effectively create a local monopoly,” says Helen Lamprell, Vodafone general counsel. “This project provides four competitors in those highly rural locations.”

In many countries governments have used mobile network deployment to raise money. In the early 2000s, when 3G was rolled out in the UK, the regulator Ofcom auctioned off frequencies to the highest bidder, raising £22.5bn. Although the windfall was lauded, some argue that such a strategy leads to poorer coverage because carriers are left with less capital to spend on the infrastructure.

Some 20 years later, it is clear why the UK government might want to extend coverage. Consumers and businesses are clamouring for remedies to patchy or non-existent coverage, internet access has been declared a human right by the United Nations — and 5G networks could potentially connect remote areas to digital services including healthcare.

The Shared Rural Network involves sharing masts already in operation, and building new infrastructure in “not spots”, where there is no coverage. The new masts can be shared by all four providers.

Conversations were pragmatic, Ms Lamprell says: “If any of the other carriers had issues with certain aspects of the deal, we had to genuinely try to understand their point of view because if it was something they cared about, it would probably affect all of us in some way.”

Unlike telecoms companies, it is not uncommon for automotive industry competitors to engage the services of erstwhile foes. But a new collaboration in the sector, launched in 2019 and since expanded, is a first of its kind — and possibly the biggest industrial alliance in the world. Two of the world’s biggest automotive makers, Germany’s Volkswagen and its US rival Ford, have agreed to help each other make and sell commercial and electric vehicles. The deal will significantly increase the supply of electric cars.

The co-operation is also innovative in having no co-ownership or joint venture. Instead, the project is based on a master collaboration agreement. In one project Volkswagen will build a car for Ford, and in the next, Ford will build a car for Volkswagen.

“You know that whatever you negotiate today, the shoe will be on the other foot tomorrow — and that reality forces parties to be very transparent and aware of the balance between the two companies,” says Maler James, a lawyer at Volkswagen who handles regulatory, M&A and foreign holdings.

“You need to think long term. Reciprocity is everything.”

Supporting business continuity and innovation during Covid-19
RankIn-house legal team
STANDOUTGlaxoSmithKline — The pharmaceutical company's collaboration with French competitor Sanofi to develop a Covid-19 vaccine required navigation of competition law, export controls and regulators. Pending drug trials, the vaccine would be used across the world to immunise populations against Covid-19. In the UK, GSK’s lawyers advised on privacy and other legal questions associated with working with competitor AstraZeneca and the University of Cambridge to deliver a testing facility to meet government targets for Covid-19 tests. The legal team created a coronavirus task force to maintain the supply of other life-saving medicines across the world and to mitigate the impact of the pandemic on existing business lines.
STANDOUTSmiths Group, Rolls-Royce, GKN and McLaren — As part of VentilatorChallengeUK, a UK government initiative to procure more ventilators, Smiths Group led a consortium of companies, including Rolls-Royce, GKN and McLaren, to make 2,000 machines in a not-for-profit collaboration. Smiths Group's legal team managed access to the company's intellectual property, and led negotiations with the Cabinet Office to put a contract in place and indemnify consortium members against product liability while production began. Rolls-Royce's legal team managed the formation of a British supply chain to procure materials involving numerous bespoke supply agreements. Staff were trained to make ventilators remotely using virtual reality technology.
HIGHLY COMMENDEDDXC Technology — DXC's legal team assigned a lawyer to each industry sector to review any regulatory changes as a result of Covid-19 that might impact contract performance across multiple jurisdictions. Using the tech tools it has implemented in the past 18 months, the legal team were able to capture all force majeure clauses and business continuity provisions on more than 100 key accounts to identify and manage risk in the space of 48 hours.
HIGHLY COMMENDEDNovartis — The Swiss pharmaceutical group’s legal team supported the expedited rollout of clinical trials, tripling the number processed in three months, and “managed access” programmes for drugs that exhibited potential efficacy in tackling the symptoms of Covid-19. The team have facilitated global social responsibility initiatives, such as making 15 generic drugs that show effectiveness against symptoms of Covid-19 available to low- and middle-income countries without profit. The scheme has so far been used by 80 countries globally.
COMMENDEDCarlyle Group — To support the private equity firm’s funds and its 360-plus portfolio companies, the legal team ensured external counsel were available to portfolio companies via a 24-hour hotline and developed a tracking tool to identify which companies in its portfolio had received government support. They also advised portfolio companies on pivoting to manufacture PPE (personal protective equipment), export controls, and winning supply contracts with healthcare services, including the UK's NHS.
COMMENDEDDouble Negative (DNEG) — As the film industry delayed theatrical releases while demand for streaming content rose, the legal team at visual effects company Double Negative were critical for business continuity. The lawyers managed client relationships with studios and repapered the corresponding contracts to reflect new ways of working that would protect content without compromising employee privacy, enabling the company to continue releasing content on streaming platforms.
COMMENDEDNational Broadband Ireland — To connect 537,000 premises to a high-speed broadband network, in a €2.6bn government project, the company brought in a new chief legal officer to operationalise a 3,000-page contract and bring the plan into reality under public scrutiny. The project management had to be done remotely because of the pandemic, including the recruitment of around 80 per cent of the company's workforce. Given the scale of the project, self-service was introduced where possible to enable the legal and compliance teams to lead on the project and obligation management.
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