The European Commission has approved a merger between the French PSA (Peugeot-Citroen) and the Italian-American FCA (FIAT-Chrysler). At the same time, the regulator put forward a number of conditions that companies must comply with. Recall that PSA and FCA want to create a single mega-group called Stellantis, the deal is estimated at $ 38 billion.
“Approval of the transaction is provided on the terms of full compliance with the package of obligations agreed by the companies,” the statement said.
European bureaucrats feared that the combined concern PSA and FCA would overly dominate the light van market in the EU: with a total share of 34%, although they do not turn into monopolists, they are significantly ahead of Renault (16%), Ford (16%), Volkswagen AG (12%) and Daimler AG (10%). The regulator assumed that such a provision would allow PSA and FCA to inflate prices.
To get permission, the French resorted to a trick: PSA offered the Japanese Toyota Motor to increase the production of its vans at the Sevelnord plant in Lies-Saint-Amans in northern France as part of an existing joint venture (JV). It produces "single-root" models Peugeot Expert, Citroen Jumpy and Toyota ProAce. The increase in Toyota production will dilute PSA's share in the light commercial vehicle niche and therefore eliminate a possible violation of antitrust laws. And the fact that the Toyota ProAce is a copy of Peugeot and Citroen is no longer a concern for regulators.
To defuse the European Commission's claims, both companies made a package of commitments, including agreeing to soften the terms of the agreement between PSA and Toyota on working conditions in the European market, as well as to ensure that competitors have access to their networks for servicing and repairing such trucks in the EU.
The combined company will take the name Stellantis and become the fourth largest automaker in the world.
PSA and FCA said they expect significant cost savings in setting up the new facility. So, 40% of it will fall on the expense of expenses related to the release of the products themselves, 40% on purchases and 20% on other areas such as marketing, IT and logistics.
The merger is expected to be finalized in January 2021.
The European Commission approved the creation of a Euro-American automobile concern for $38 billion
