FCA, PSA to Be Probed Deeply Ahead of Merger

Matt Posky
by Matt Posky
fca psa to be probed deeply ahead of merger

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]

Join the conversation
2 of 11 comments
  • Akear Akear on Jun 11, 2020

    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.

  • Jeff S Jeff S on Jun 12, 2020

    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.

  • Jeff S I ignore the commercials. Never owned a Mazda but I would definitely look at one and seriously consider it. I would take a Honda, Toyota, or Mazda over any German vehicle at least they are long lasting, reliable, and don't cost an arm and a leg to maintain.
  • GregLocock The predictable hysteria and repetition of talking points in the meeja is quite funny. it does not divide Oxford into six zones. it restricts access at 6 locations , one on each road, to reduce congestion in the town centre. Florence, which faces the same issue, traffic and narrow historic streets, lined with historic buildings, simply closed the entire town centre off. Don't see anybody whining about that.
  • Jeff S I have rented from Hertz before and never encountered this but if I had I would sue them. Would not want a gun pointed at me and thrown in jail for renting a car.
  • Arthur Dailey I did use a service pre COVID to get the pricing that the dealers were alleged to have paid the manufacturer. It also provided 'quotes' from multiple dealers .
  • Arthur Dailey Has anyone else concluded that we may have a new 'troll' on this site?