PSA and Fiat-Chrysler face exhaustive antitrust probe over merger
The groups are set to miss a deadline to allay concerns about their strong position in the van market
The $50bn merger between France’s PSA and Italian-American Fiat-Chrysler faces a full-scale antitrust probe after the two companies failed to provide concessions to EU officials, according to people with direct knowledge of the situation.
PSA and FCA, which plan to create the world’s fourth-largest carmaker, faced a deadline of Wednesday evening to allay concerns in Brussels about their combined might in the highly lucrative small van segment.
The combined van units would give PSA-FCA a third of the European market, more than double the 16 per cent of Renault or Ford, the two closest competitors.
However, the companies have been reluctant to sell the divisions, which are highly profitable, according to three people familiar with the negotiations.
People with direct knowledge of the EU probe said that during the lengthier phase, which will last four months, the companies must either sell all or part of the division or appease competition concerns through other means.
But the deal is expected to be cleared eventually by EU authorities and the firms had already priced in a more taxing probe given the size of the deal, these people added.
PSA and FCA already have a joint venture producing some light commercial vehicles in Europe.
Scrutiny of the van divisions had been expected going into the deal, which was announced formally in December and is expected to close in the first quarter of 2021.
If it closes, the deal will catapult the two businesses past rivals including General Motors and Hyundai-Kia to become a 9m-a-year manufacturer, with strong positions in Europe and North America and one of the most profitable vehicle line-ups of any carmaker globally.
While the deal needs to clear antitrust hurdles in other markets such as Latin America, Europe is the region where the companies have the greatest overlap.
The European Commission, which needs to decide on the merger by next week, declined to comment.
Representatives from FCA and PSA declined to comment.
Separately on Wednesday, PSA said that the Vauxhall Ellesmere Port car plant in the UK will not reopen until September.
The plant, which produces the Vauxhall and Opel Astra, has been offline since March. The Astra model is also made in Gliwice in Poland, which restarted production on Monday.
PSA was the first major group to close all European factories, and consistently said it will not restart its operations until demand recovers.
Some Ellesmere Port workers will be redeployed to PSA’s Luton van plant, which restarted in May and is about to add a third shift to increase output because of strong demand.