(C) Reuters. The logos of car manufacturers Fiat and Peugeot are seen in front of dealerships of the companies in Saint-Nazaire
By Foo Yun Chee
BRUSSELS (Reuters) – Fiat Chrysler’s (MI:FCHA) planned $50 billion merger with Peugeot (OTC:PUGOY) maker PSA (PA:PEUP) has hit a bump after EU regulators voiced concerns about the companies’ market share in small vans, indicating concessions may be required, sources said.
Fiat and PSA, which are seeking to create the world’s fourth biggest carmaker, were told of the European Commission’s concerns last week, according to the sources familiar with the matter.
If the two companies fail to dispel those concerns in the next two days and then decline to offer concessions by Wednesday, the deadline for doing so, the deal would face a four-month investigation once the preliminary review ends.
The EU competition enforcer, which has set a June 17 deadline for concluding its preliminary review, declined to comment. Fiat and PSA also declined to comment.
Fiat Chrysler and PSA already produce vans through a 50-50 joint venture called Sevel. Based in Atessa, Italy, Sevel is Europe’s largest assembly plant for vans, producing 1,200 units a day before interruptions due to the coronavirus.
According to the European Automobile Manufacturers Association (ACEA), the two carmakers produced a total of 755,000 light commercial vehicles last year, giving them a potential combined market share of around 34%, the market leader, followed by Renault (PA:RENA) and Ford (N:F) with about a 16% market share each.
Hiving off overlapping businesses – usually a regulatory demand to ensure more competition – could prove tricky for Fiat Chrysler and PSA because of the technicalities.
News of the European Commission’s concerns trimmed gains in the two carmakers’ share prices on Monday.
Fiat Chrysler shares were up 1.56% in late trade, after rising more than 3% in early trading, while PSA shares, were 2.4% higher, after rising more than 4% early in the day.
Fiat and PSA are looking to merge to help offset slowing demand and shoulder the cost of making cleaner vehicles to meet tougher emissions regulations.
The deal will put the Italian carmaker’s brands including Fiat, Jeep, Dodge, Ram, Maserati and the French company’s Peugeot, Opel and DS all under one roof.
Shares in Fiat Chrysler and PSA have both slumped by nearly 30% since the start of this year due to the impact of the coronavirus.
Exclusive: Fiat, PSA merger hits EU roadblock, may need concessions – sources
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