Dark cloud hangs over PSA-FCA merger
Plan to forge alliance between two auto giants has hit a large bump in the road as EU regulators wade in over potential breach of competition ruleFiat Chrysler Automobiles (FCA) and Peugeot-Citroen PSA Group's plan to create the world's fourth biggest car-maker could crumble because aspects of the deal may breach EU regulations.
According to a source speaking to newswire
, the FCA-PSA merger is set to break strict rules governing competition. Concerns have already been raised with the European Commission over the two firms' dominant share of the small van market.If PSA and FCA fail to dispel concerns that the merged company will not prevent, restrict or distort competition in Europe in the next two days, the EC will freeze the negotiations and launch its own four-month-long investigation.
The issue is claimed to concern the existing FCA-PSA 50/50 joint-venture that had produced 1200 vans a day atthe Atessa plant in Italy before the COVID-19 enforced shutdowns. EU officials are worried that both groups already have a stranglehold over the van market. That domination will only worsen after the merger, with both companies set to capture 34 per cent market share.
It's thought the regulators will demand an end to the joint-venture, but that may not happen due to "technical difficulties", says the insider.
Both FCA and PSA are rumoured to be both looking for a quick hitch as both companies grapple with slowing demand as a result of the ongoing pandemic.
The new alliance will be crucial to cover the increasing costs of meeting strict EU emissions regulations.
It's not known whether a delay caused by the EC investigate could scupper the deal.
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
