As expected, the European Antitrust takes time on the marriage between FCA and PSA. The European Commission has opened "an in-depth investigation" into the merger between the two auto giants. At the basis of the decision there is in fact the concern of the Community Antitrust relating to the fact that the "transaction could reduce competition in the commercial vehicle sector (van) below 3,5 tonnes in the European Economic Area, specifically in 14 EU Member States and the UK”.
The merger between the two companies is expected to close by the end of 2020 and would create the world's fourth-largest automaker after Volkswagen, Toyota and the Renault-Nissan-Mitsubishi alliance.
Today's announcement represents the second phase of the Antitrust procedure which gives Brussels 90 working days to take the final decision. A further 15-day postponement is also possible in the event that FCA and PSA offer commitments. Finally, according to EU rules, another 20-day extension upon request or with an agreement of the parties cannot be excluded. Furthermore, if they do not provide important information requested by the Commission, the clock may be blocked until it is provided.
Returning to today's decision, the number one of the EU Antitrust, Margrethe Vestager explained that "'commercial vans are important for people, SMEs and large companies when it comes to distributing goods and providing services to consumers: it is a growing and increasingly important market in the digital economy as private consumers depend on delivery services”. Vestager added that “Fiat Chrysler and Peugeot SA, with their broad portfolio of brands and models, have a strong position in commercial vans in many European countries: we will carefully consider whether the proposed transaction would adversely affect competition in these markets and we will ensure that a healthy competitive environment remains for all individuals and businesses that rely on commercial vans for their businesses.”
Speaking in percentage terms, the two companies together control 34 percent of the minivan market, against 16 for Renault and Ford. But the share rises to 45 percent for the French market, dominated by PSA, and to 48 percent in Italy. However, the concerns of the EU Commission concern in particular the competition for certain types of light vehicles "in Belgium, Croatia, Czechia, France, Greece, Hungary, Italy, Lithuania, Luxembourg, Poland, Portugal, Slovakia, Slovenia, Spain and the United Kingdom" . “In many of these countries, it would hold high market shares, along with the widest range of brands and models of all sizes”. The two companies “appear particularly strong in the smaller van segment, there are fewer competitors in vans than in passenger cars, and in most of these countries, all competitors would be significantly smaller than the merged entity”, reads the note.
Immediately after the announcement arrived from Brussels FCA and PSA have confirmed their goal of finalizing the merger by the first quarter of 2021, assuring that "they will continue to collaborate with the European Commission to provide answers to their questions with the same constructive spirit that has characterized the merger proposed since the beginning", reads a joint note released by the two groups.
“As we carry forward the activities of the PSA-FCA joint working teams, we will provide the European Commission – and other regulators involved – detailed information on the significant benefits of the merger proposal for customers, the industry in Europe and each group”, is specified in the note which underlines how “the preparations for the merger are proceeding as scheduled”. Finally, FCA and PSA recall that "the antitrust authorities of various jurisdictions have already given their approval, including the United States, China, Japan and Russia" and "reaffirm the shared goal of finalizing the transaction by the end of the first quarter of 2021 ”.
The events of the day also had an impact on the stock exchange performance. In Milan FCA loses 0,7%, while in Paris Peugeot shares lose 0,6%. To weigh on the performance too Acea data on May sales, fell in the European Union by 52,3%.
