By on June 10, 2020

Executives from Fiat Chrysler Automobiles (FCA) and PSA Group are reportedly concerned that their companies are in for an extensive probing by the European Commission before their planned merger can take place. Ideally, the duo have said they want to finalize the deal early in 2021, but the prolonged investigative dive may force them to readjust that timeline.

The European Union has historically been a big fan of antitrust investigations and often tries to predict future business actions to address how newly formed organizations might impact the market overall. It’ll be a difficult task, what with automotive sales suppressed by coronavirus lockdowns and the global economy looking particularly grim.

Few are under the impression that the merger will be blocked, however. 

“Regulatory approval of Fiat Chrysler-Peugeot’s tie-up is still likely, given potential antitrust concerns are small compared with the deal’s size,” Bloomberg Intelligence analyst Aitor Ortiz said this week. “They may be addressed with remedies. These concerns should send the deal to a phase-two review.”

From Bloomberg:

Fiat and PSA didn’t take a chance to try to settle antitrust concerns with an early-stage offer that had to be submitted by Wednesday. The EU has a June 17 deadline to clear the deal unconditionally or open the extended investigation.

The companies agreed in December to create the world’s fourth-biggest automaker. They have so far kept the deal afloat through the course of the coronavirus pandemic’s immense disruption to auto factories and dealerships around the globe.

Longer probes can be beneficial by allowing companies to argue for fewer concessions, or to hammer out more complicated divestments or changes to licensing or distribution. The EU often only accepts a clear-cut sale as a quicker solution to its concerns.

Despite a truly ugly 2020, PSA and FCA remain committed to their $50-billion agreement to join forces. The EU, however, may have some concessions waiting for them based on European market overlap of some subsidiaries — mainly as it relates to small cars and vans.

According to Ortiz, the two company’s combined market share of mini cars and subcompact crossovers could end up being 65 percent. That, as well as other aspects of the merger, will likely encourage the European Commission to enact a “phase-two” investigation that could push its early-stage offer deadline (July 17th) all the way to October. Ultimately, it may also force PSA and FCA to postpone everything. The upside is that it gives them time to negotiate with regulators, potentially getting more of what they want. The downside is that it opens them both up to more concessions if the EU doesn’t like what it sees.

Neither automaker has commented on the matter; nor do they really need to. PSA boss Carlos Tavares has already said that everything will be done to ensure the deal moves forward.

“Whatever we have to discuss or modify, we will,” he noted in February.

[Image: afapress/Shutterstock]

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11 Comments on “FCA, PSA to Be Probed Deeply Ahead of Merger...”

  • avatar

    The odds of FCAPSA dominating any market varies between slim and none.

  • avatar
    Art Vandelay

    MMM….SRT powered 300 with old school Citroen suspension

  • avatar

    Just another merger of the weaker players in the market, just like all the earlier ones: Fiat, Chrysler, AMC, Simca, Alfa Romeo, etc. etc. 80’s was a brutal time.

    I was honestly surprised Mitsubishi wasn’t in this mix too instead of Renault-Nissan. Seeing how healthy that alliance is currently, though, maybe we’ll see a Renault-Nissan-FCPSA before too long.

    Curious to find out how many of the current automotive brands remain standing in the next 10 years.

    • 0 avatar

      The only thing you left out was the “two drowning people holding onto each other for support” analogy. It has a long history in the auto industry. There was Cord-Duesenberg – gone; Kaiser-Willys(Jeep) – gone; Packard-Studebaker – gone; Hudson-Nash(AMC) – gone. It doesn’t look promising in retrospect, but the tie-ups looked good at the time.

      • 0 avatar

        Yup yup. These firms would’ve been dead much earlier otherwise, so it’s not a bad thing necessarily in giving them a fighting chance of survival.

        I do find it funny that Chrysler always seem to be at the scene of these things (though now as a part of Fiat).

  • avatar

    wow “…probed deeply” <—- that wording tho

  • avatar

    I don’t like the idea that a French company will be larger than GM. The US auto industry has fallen behind the Germans, Japanese, and South Koreans. Now it looks as if the French are pulling ahead as well. The way things are going I would not be surprised if GM is in 7th place in a decade.

  • avatar
    Jeff S

    I don’t care at this point GM has brought this upon themselves and is either headed for the dustbin or Chinese ownership. The French Government will more likely mess up FCA with their interference and make the original Fiat merger appear to be not so bad. The French overall make lousy cars.

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