The European Commission has opened an investigation to assess the proposed merger of automotive companies Fiat Chrysler Automobiles N.V. and Peugeot S.A. under the EU Merger Regulation.
The Commission is concerned that the proposed transaction may reduce competition with respect to light commercial vehicles (vans) below 3.5 tonnes in the European Economic Area (EEA) and, more specifically, in 14 EU Member States and the UK.
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.
At this stage, the Commission is concerned that the proposed transaction could significantly reduce competition for certain types of light commercial vehicles in the following Member States: Belgium, Croatia, Czechia, France, Greece, Hungary, Italy, Lithuania, Luxembourg, Poland, Portugal, Slovakia, Slovenia, Spain and the UK.
In many of these countries, PSA and FCA combined would hold high market shares, together with the widest range of brands and models across all sizes. The parties appear particularly strong in the smaller vans 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.
The Commission's preliminary investigation shows that PSA and FCA have historically competed head-to-head for vans in a number of EU Member States and price positioned their vans similarly. The merger would thus remove an important competitive constraint for both of them.
In addition, the market for light commercial vehicles seems to be characterised by relatively high barriers to entry and expansion, for example, the necessity to have a sufficiently large service network which is not quick and easy to set up. New entry seems unlikely on any significant scale.
The Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether it is likely to significantly reduce effective competition.
The proposed transaction was notified to the Commission on 8 May 2020. PSA and FCA have decided not to submit commitments during the initial investigation to address the Commission's preliminary concerns. The Commission now has 90 working days, until 22 October 2020, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation. ■