Fiat Chrysler-PSA deal wins conditional EU approval

Aoife White and Tara Patel
Bloomberg

Fiat Chrysler Automobiles NV and PSA Group won European Union approval to merge their operations, overcoming the biggest hurdle in their year-long quest to become the world’s fourth-largest carmaker.

The European Commission said the company’s pledge to make vehicles at French and Spanish plants for Toyota Motor Corp. and open up its repair network to rivals eliminated concerns about the combined firm’s growing power over small vans crucial to deliveries.

“Access to a competitive market for small commercial vans is important for many self-employed and small and medium companies throughout Europe,” EU Competition Commissioner Margrethe Vestager said in an emailed statement on Monday. “Their commitments will facilitate entry and expansion in the market for small commercial vans.”

EU approval comes a year after the companies unveiled their agreement to combine in a deal aimed at turning two mid-sized auto manufacturers into a global heavyweight. It also paves the way for shareholders to vote on the plan at separate meetings scheduled for Jan. 4. They will be asked to approve the creation of the combined company called Stellantis.

The two companies said in a joint statement that they “warmly welcome” the commission’s clearance. The deal is expected to close by the end of the first quarter of 2021, they added.

Adviser Glass Lewis this month recommended investors vote in favor of the deal, saying its strategic and financial basis is sound. While the companies tweaked the terms of the tie-up due to the pandemic, they managed to steer it safely through a crisis that has doomed other deals such as Boeing Co.’s combination with Embraer SA’s commercial-aircraft business.

The duo escaped the risk of divesting operations with their offer to deepen an existing agreement under which PSA makes small and mid-sized utility vehicles for Toyota at its French and Spanish factories.

The commission opened a longer probe into the car deal in June, flagging potential worries it would eliminate a provider of light commercial vehicles in Europe at a time when the market was growing as an increasing numbers of consumers get online shopping deliveries.

Antitrust regulators are often a difficult obstacle for European companies seeking to buy or combine with rivals. In a bruising battle last year that had strong political backing, German and French rail-equipment makers Siemens AG and Alstom SA failed to gain EU approval for their planned combination.

French Finance Minister Bruno Le Maire and German Economy Minister Peter Altmaier responded to the landmark decision with a pledge to work to overhaul European competition laws and industrial policy.