06/17/2020 | Press release | Distributed by Public on 06/17/2020 11:49
The European Commission has opened an in-depth investigation to assess the proposed merger of automotive companies Fiat Chrysler Automobiles N.V. ('FCA') and Peugeot S.A. ('PSA') 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.
Executive Vice-President Margrethe Vestager, responsible for competition policy, said: 'Commercialvans are important for individuals, SMEs and large companies when it comes to delivering goods or providing services to customers. They are a growing market and increasingly important in a digital economy where private consumers rely more than ever on delivery services. Fiat Chrysler and Peugeot SA, with their large portfolio of brands and models, have a strong position in commercial vans in many European countries. We will carefully assess whether the proposed transaction would negatively affect competition in these markets and ensure that a healthy competitive landscape remains for all the individuals and businesses relying on commercial vans for their activities.'
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.
The Commission's preliminary competition concerns
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.
Companies and products
Fiat Chrysler Automobiles N.V. (FCA), headquartered in the UK,manufactures, supplies and distributes passenger vehicles and light commercial vehicles under the brands Fiat, Chrysler, Jeep, Alfa Romeo, Lancia, Abarth, Dodge, Ram, and Fiat Professional. In addition, FCA owns the automotive cast components business Teksid S.p.A., the plastic components and modules business Plastic Components and Modules Automotive S.p.A. and the automotive production systems business Comau S.p.A.. It also provides retail and dealers financing to support the sales of its branded vehicles.
Peugeot S.A. (PSA), headquartered in France, manufactures, supplies and distributes passenger vehicles and light commercial vehicles under the Peugeot, Citroën, Opel, Vauxhall and DS brands. Through its subsidiary, Faurecia S.A., it is also active in the manufacture and supply of interior automotive components. PSA also provides ancillary services such as financing solutions for the acquisition of motor vehicles, as well as mobility services and solutions.
Merger control and procedure
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to the current transaction, there are currently five on-going Phase II merger investigations: the proposed acquisition of Transat by Air Canada; the proposed acquisition of GrandVision by EssilorLuxottica, the proposed acquisition of DSME by HHiH, the proposed acquisition of Chantiers de l'Atlantique by Fincantieri, and the proposed acquisition of Lotos by PKN Orlen.