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Fiat-Chrysler and Peugeot merger now under investigation

The merger between Fiat Chrysler Automobiles and Peugeot S.A. is now under investigation by the European Commission, as a successful deal could lead to a significant reduction in competiton in the automotive industry.

Last year, Fiat Chrysler Automobiles (FCA) and Peugeot S.A. (PSA) announced a $50.5 billion deal that would see both automotive firms join forces in a 50-50 merger deal If successful, the merge would create the world 4th largest automaker FCA turned to PSA after an attempt to merge with Renault last year fell through due to political reasons

Last year, Fiat Chrysler Automobiles (FCA) and Peugeot S.A. (PSA) announced a $50.5 billion deal that would see both automotive firms join forces in a 50-50 merger deal, creating the world’s fourth largest automaker. Now, the deal is facing a new obstacle. 

“Scheduled to make a decision on the proposed automobile mega-merger between Fiat Chrysler Automobiles (FCA) and Peugeot (PSA) on Wednesday, the European Commission launched an in-depth investigation into the deal,” Statista reported

The Commission is concerned that the proposed transaction may reduce competition with respect to light commercial vehicles (vans) below 3.5 tonnes in the European Economic Area (EEA) and, more specifically, in 14 EU Member States and the UK.

Graph: Statista

Executive Vice-President Margrethe Vestager, responsible for competition policy, said: “Commercial vans are important for individuals, SMEs and large companies when it comes to delivering goods or providing services to customers. They are a growing market and increasingly important in a digital economy where private consumers rely more than ever on delivery services.”

He continued: “We will carefully assess whether the proposed transaction would negatively affect competition in these markets and ensure that a healthy competitive landscape remains for all the individuals and businesses relying on commercial vans for their activities.”

The Commission’s preliminary investigation shows that PSA and FCA have historically competed head-to-head for vans in a number of EU Member States and price positioned their vans similarly. The merger would thus remove an important competitive constraint for both of them, and could negatively impact consumers. 

The Commission now has 90 working days, until 22 October 2020, to take a decision. 

On another note, FCA was in discussions to merge with Renault last year, but the deal fell through due to political reasons. Now, the FCA has turned to PSA.

FCA has multiple automotive brands under its name, including Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram. PSA owns multiple brands too, including Peugeot, Opel, Vauxhall, Citroën and DS Automobiles.