The European Commission announced on Wednesday the opening of an in-depth investigation into the proposed merger between car manufacturers PSA and Fiat Chrysler (FCA) fearing a reduction in competition. The two groups, which could give birth to the world number 4 in the sector, occupy "a strong position" on the commercial vehicle market, explained the European Commissioner for Competition, Margrethe Vestager. "We will carefully assess whether the proposed transaction will have a negative impact" on this competitive market, she added.
The proposed merger had been notified to the Commission on May 8. Following a preliminary investigation, the two groups decided not to submit commitments - such as the sale of activities or sites, for example - to respond to Brussels' concerns. The European executive now has until October 22, 2020 to make its decision.
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- 20 Minutes (@ 20Minutes) June 15, 2020The Commission is concerned that the proposed transaction will reduce competition on light commercial vehicles weighing less than 3.5 tonnes in 14 Member States (Belgium, Croatia, Czech Republic, Spain, France, Greece, Hungary, Italy, Lithuania, Luxembourg, Poland, Portugal, Slovakia, Slovenia), as well as in the United Kingdom. "In many of these countries, PSA and FCA together have high market shares, as well as the widest variety of brands and models of all sizes," she said.
FCA and PSA determined to merge
Together, the Italian-American manufacturer FCA (Fiat, Chrysler, Jeep, Maserati, Alfa Romeo, Dodge and Ram) and the French PSA (Peugeot, Citroën, DS, Opel and Vauxhall) accumulated in 2019 around 170 billion euros of turnover and have sold nearly 8 million vehicles.
They remain determined to finalize their merger at the end of 2020-beginning of 2021, despite the coronavirus pandemic which caused the collapse of the automobile market and caused each of them a heavy quarterly loss.
Sales plummets
Fiat Chrysler sales fell 16% in the first three months of the year to 20.56 billion euros. The group sold 818,000 vehicles over this period, 21% less than a year ago.
PSA saw its turnover plummet 15.6% to 15.2 billion euros. It sold 627,000 vehicles, which is 29% less than last year.
The second quarter looks even worse, with the European automotive market at half mast, affected by the closure of dealerships in many countries.
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