Vans Could Put Major Automaker Merger In Jeopardy

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Will this deal ever happen?

Earlier this month, reports came out claiming the proposed $50 billion 50-50 merger between Fiat Chrysler Automobiles and France's PSA Groupe was still not a done deal because EU antitrust regulators didn't like something. What was it? The van segment. What could become the world's fourth-largest automaker has a van problem and the two automakers have failed to convince those regulators (or offer concessions) to prove they wouldn't monopolize the segment. So, what's happening now?

Reuters has an updated report claiming EU anti-trust regulators have now opened a fourth-month long investigation into the proposed merger, focusing specifically on vans. But why vans, of all types of vehicles? Because vans, notably small delivery vans, remain incredibly popular in Europe and the European Commission is concerned about FCA-PSA's potentially high market share.

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"In many countries, either PSA or FCA is already the market leader in light commercial vehicles, and the merger would remove one of the main competitors," one EU executive said. Basically, the merger, as it's currently being proposed, could potentially reduce competition in this segment in several countries, among them Belgium, France, Greece, Italy, Spain, and the United Kingdom.

During this investigation period, regulators will closely examine the terms of the merger with a very specific focus on - you guessed it - vans. A final decision is expected to arrive by October 22.

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Meanwhile, FCA and PSA announced they have a goal to close the merger deal by the end of the first quarter of 2021. So why is this investigation happening at all? Because neither of the automakers offered concessions to help put regulators' minds at ease. However, the merger deal has already been approved in the US, China, Japan, and Russia.

Assuming the EU ultimately gives the green light, the new automaker will bring all FCA brands, among them Jeep and Dodge, and the PSA Groupe, including Peugeot and Citroen, all under one roof. It's not like the Jeep Wrangler will suddenly begin production in, say, France, or Peugeots will return to the US market, but both companies would benefit by sharing the costs of building electric vehicles. They could each enter markets where they're currently weak.

But until October, at the earliest, this deal remains on ice.

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Source Credits: Reuters

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