PSA wants quick hitch with FCA

The merger of France’s PSA Group and the Italian-American Fiat Chrysler Automobiles is still on, despite US giant General Motors declaring a legal war on FCA.

PSA, the parent of Peugeot and Citroen, is determined to push ahead with the $US50 billion merger despite GM accusing PSA’s takeover target of racketeering and bribing union officials.

The merger, which would create the world’s fourth-biggest car-maker by volume (behind Toyota, the Volkswagen Group and the Renault-Nissan-Mitsubishi alliance), is under threat, though.

Despite FCA chairman John Elkann calling it “meritless,” GM has filed a racketeering lawsuit against the company, breaching unwritten conduct laws inside the US Big Three.

It alleges that FCA cost it billions of dollars worth of sales by conspiring with and bribing union officials to score more favourable union agreements.

The lawsuit goes into great detail to explain how the cheating worked, including how FCA syphoned payments to Union of Auto Workers officials to corrupt the collective-bargaining system.

It alleges that FCA’s illegal actions forced GM to pay higher wages at its factories than FCA did and gaining both a sales and a profit advantage.

It specifically points the finger at FCA’s late kingmaker, Sergio Marchionne, suggesting that FCA’s post-bankruptcy rise only came about because of fraud and corruption.

The lawsuit’s documentation begins in 2009, when Fiat took control of the bankrupt Chrysler from the US government for, essentially, the MultiAir combustion engine technology (which was co-developed by GM).

The filing slams Marchionne as the man at the centre of the union bribery.

It even suggests that it was FCA’s aim to specifically target and weaken GM to force it into a merger with FCA.

While FCA has damned the lawsuit with ridicule, the GM case has some foundation in that US federal prosecutors have forced three FCA executives to plead guilty to various charges.

Union leaders have also been forced to resign and face federal charges, with prosecutors accusing FCA executives of peddling a strategy of keeping union leaders “fat, dumb and happy” at the expense of both their workers and GM.

GM’s goal is to force FCA to pay it billions in compensation, and maybe even shake its merger apart.

But PSA has shaken off the lawsuit, insisting it was full-steam ahead to get the merger completed in the next six weeks.