File picture: Regis Duvignau / Reuters.
File picture: Regis Duvignau / Reuters.

EU concerned that Fiat Chrysler-PSA merger could 'choke' competition

By Ella Joyner and Alvise Armellini Time of article published Jun 18, 2020

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Brussels, Belgium - The European Commission has opened an in-depth investigation into the planned merger between Fiat Chrysler Automobiles and PSA, which is the parent company of Peugeot, Citroen and Opel.

The deal - which would create the world's fourth-largest automotive group behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota - may reduce competition in the increasingly important van sector, the European Union's executive branch said on Wednesday.

The commission added that it should finish investigating the merger by October.

"With their large portfolio of brands and models, [the two companies] have a strong position in commercial vans in many European countries," commission Vice-President Margrethe Vestager - responsible for competition - said in a press release.

Having carried out a preliminary investigation, commission officials are now to scrutinise more closely the likely effect of the merger in the light - weighing less than 3.5 tons - commercial vehicles sector.

In a joint statement, FCA and PSA said they would "continue to cooperate with the European Commission to answer its questions in the same constructive spirit that has defined the proposed merger from the start."

"We will be detailing to the European Commission - and other regulators - the substantial benefits of the proposed merger to our customers, the European industry and each company," the two carmakers said.

"Antitrust approvals have already been granted in a number of jurisdictions, including the US, China, Japan and Russia," they went on, confirming their objective to finalise the merger "by the end of the first quarter of 2021."

FCA and PSA already have a deal for the joint manufacturing of vans.

According to Vestager, the commercial van sector is of growing importance in the delivery-oriented digital economy era.

"There are fewer competitors in vans than in passenger cars, and in most of these countries, all competitors would be significantly smaller than the merged entity," the commission explained.

The commission acts as the antitrust watchdog for the EU single market. It has the power to intervene if it believes EU consumers' interests may be damaged or competition undermined.

In the case of mergers, it can demand certain conditions, such as selling off parts of a company, before they can go ahead, or block them altogether.

The opening of an in-depth investigation does not prejudge the outcome, the commission stressed.

The PSA-FCA deal comes at a critical juncture for the car industry, threatened by slumping sales in the wake of the novel coronavirus, and the need to make costly investments on new technologies such as hybrid, electric and self-driving vehicles.

When they announced their tie-up last year, FCA and PSA said they expected annual cost savings from the merger of 3.7 billion euros (4.15 billion dollars) thanks to economies of scale, without closing any factories.

dpa


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