PSA and Fiat Chrysler merger faces EU competition probe

Tom Belger
Finance and policy reporter
Fiat Chrysler and PSA Peugeot have signed a deal for a 50-50 merger, creating the world's fourth-largest automaker with annual sales of 8.7 million cars. (AP Photo/Luca Bruno)

The EU has announced a full investigation into Fiat Chrysler’s (FCA.MI) planned merger with Peugeot owner PSA (UG.PA) over competition concerns.

The European Commission said it would mount a four-month probe into the tie-up’s potential impact on the current “healthy competitive landscape” in the commercial van market.

Its enquiries will focus on 14 member states and the UK where the two players have a significant presence. It said in a statement on Wednesday the two companies were already market leaders in the sector in many countries, and the merger would “remove one of the main competitors.”

The commission’s executive vice-president Margrethe Vestager, responsible for competition policy, said commercial vans were a key sector “in a digital economy where private consumers rely more than ever on delivery.”

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“We will carefully assess whether the proposed transaction would negatively affect competition,” she said.

The tie-up would create the fourth biggest carmaker in the world. Both sides are keen to share the cost of transformation into less polluting vehicles as demand weakens and emissions standards tighten, according to Reuters.

Leading car manufacturers were battling low demand already before the coronavirus sent sales into nosedive.

Italian-American Fiat-Chrysler owns Fiat, Jeep, Maseratti and other brands, while PSA owns Peugeot, Opel and DS.

A PSA spokesperson said: “Both companies will continue to cooperate with the Europen Commission to answer its questions in the same constructive spirit that has defined our proposed merger from the start.”

It said it will argue the merger means “substantial benefits” for both companies and consumers.

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“Preparations for the merger are advancing as planned. Antitrust approvals have already been granted in a number of jurisdictions, including the U.S., China, Japan and Russia. Groupe PSA and FCA reaffirm the shared objective to close the transaction by the end of the first quarter of 2021,” he added.