Fiat-Peugeot Faces EU 'Obstacle' in Merger Preparation... May Undergo 4-Month Investigation

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Automobile manufacturers Fiat Chrysler Automobiles (FCA) and Peugeot Citro?n are facing an obstacle in the form of the European Union (EU) while proceeding with their merger process. The EU Commission has put a brake on the market share of small vans, raising the possibility that the merger could be delayed by four months.

According to major foreign media on the 8th (local time), the EU Commission reportedly informed FCA and Peugeot last week that there is an issue with the market share of small vans if they merge, and that it may violate regulatory measures designed to ensure greater competition. In this regard, the two companies must respond to the EU Commission by the 10th, and if their explanation is not accepted, they will undergo a preliminary review by the 17th followed by a four-month investigation, according to sources cited by foreign media.

FCA and Peugeot already produce vans through their joint venture, Sevel, which they own 50-50. The Sevel plant in Atessa, Italy, is the largest van assembly plant in Europe, producing up to 1,200 units per day before the outbreak of the novel coronavirus (COVID-19). According to the European Automobile Manufacturers Association (ACEA), FCA and Peugeot's combined market share in the general small car segment last year was about 34%. Renault and Ford each held 16%, Volkswagen 12%, and Daimler about 10%.

Earlier, FCA and Peugeot agreed on October 31 last year to pursue a merger with a 50-50 shareholding without closing any plants. Although the merger process is underway, concerns have recently arisen in the market that the merger may face difficulties due to challenges in securing cash amid the COVID-19 crisis.

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