EU Commission wants to take a closer look at the Fiat PSA deal

Fiat and the Opel, Peugeot mother want to join forces to form the fourth largest car manufacturer. But the EU Commission has concerns.

The megafusion of the car manufacturer Fiat Chrysler with the Opel mother PSA has been slowed down for the time being: The EU Commission has concerns and therefore initiated an in-depth investigation into the case on Wednesday, which could drag on until October 22. The background to this is the fear that the merger of the two vehicle manufacturers could restrict competition in the van market.

The Opel mother PSA and Fiat Chrysler had decided their merger in December. The fourth largest automaker in the world is to be created. However, the new group would also have high market shares in the delivery van segment of up to 3.5 tons in many countries, the EU Commission said. In contrast to the car market, there are fewer providers and high entry barriers for competitors.

FCA with Italian-American roots and the French PSA group jointly stated that they will continue to complete the merger by the end of March next year at the latest. Accordingly, they continue to work constructively with the Commission. “The preparations for the merger are proceeding as planned.” The respective competition authorities have already given the green light in the USA , China, Japan and Russia.

So far, both vendors have been competing head-to-head in many markets and have adjusted their prices accordingly. This could be eliminated in the event of a merger, the Commission argued. Specifically, competition could be restricted in 14 EU countries and Great Britain.

“Commercial vans are important for individuals, medium-sized companies and large companies if they want to bring their goods or services to the customer,” said Commission Vice President Margrethe Vestager.

Fiat and Peugeot have a strong market position. “We will carefully check whether the proposed transaction would have a negative impact on competition in these markets.” The goal is healthy competition.

The companies announced their merger on May 8. The Commission stressed that during the preliminary investigation, companies did not want to commit to address the concerns. The Commission now has a further 90 working days for an in-depth examination. However, the fact that this was initiated does not yet allow any conclusions to be drawn about the outcome.

The automakers had planned 12 to 15 months for the merger to take place at the end of last year. The corona crisis has meanwhile changed the circumstances of the deal and put the automotive industry under further pressure. Sales and registrations of new cars have plummeted. According to the ACEA industry association, in May they were a good 52 percent below the figure for the same month last year.

The entire auto industry is undergoing tremendous change. Manufacturers have to put billions into the difficult transition to e-mobility and digitalization. The slump in demand in the corona crisis increases the pressure on companies. Fewer consumers are interested in buying a car.

Thousands of jobs in the industry are on the brink. French PSA competitor Renault plans to cut 15,000 jobs worldwide.

In addition to Opel, PSA also carries the Peugeot, DS and Citroën brands. Fiat Chrysler offers the brands Alfa Romeo, Chrysler , Dodge, Jeep, Lancia or Maserati.

Fiat Chrysler and PSA together sold around 8.7 million vehicles a year before the crisis and had a turnover of 170 billion euros. The merger would create an auto giant. Only Volkswagen, Toyota and the French-Japanese Renault-Nissan group were bigger last year. According to earlier information from the French Ministry of Economic Affairs and Finance, around 400,000 people were employed before the merger plans.

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