Fiat Chrysler Automobiles N.V. / Peugeot S.A. Phase II Merger Approved by the European Commission With Conditions

On 21 December 2020, the European Commission approved the proposed $52bn (£38bn) merger between automotive companies Fiat Chrysler Automobiles N.V. (‘FCA’) and Peugeot S.A. (‘PSA’) following a Phase II investigation, subject to conditions. Both companies are active worldwide, with a strong manufacturing base in the European Economic Area (EEA). The transaction will lead to the creation of the fourth largest automotive group in the world, to be called “Stellantis”.

Compass Lexecon advised the Parties throughout the Commission’s in-depth investigation. The Commission had concerns that the transaction would harm competition in the market for light commercial vehicles (“LCV”) in nine EEA Member States (Belgium, Czechia, France, Greece, Italy, Lithuania, Poland, Portugal and Slovakia), where the companies have high combined market shares and are particularly close competitors.

Our experts assisted the Parties in responding to these concerns by analyzing the closeness of competition between the Parties and price effects in the markets in question, using market shares, diversion patterns, and detailed margin information to determine price pressure indices (GUPPIs). We submitted price and customer analyses for the LCV segment and an efficiencies analysis to the Commission.  Our analyses demonstrated that the LCV segment is characterized by several strong competitors, which could exert a competitive constraint on the Parties post-merger. They also showed that the deal could lead to material market efficiencies to the benefit of consumers.  We also supported the Parties in designing a remedy package to allay the Commission’s competition concerns in the LCV market in the EEA.

In addition, we supported the Parties in their interactions with several other competition agencies reviewing the merger, including Tunisia, Turkey, Ukraine, Mexico, Brazil, and Chile.

The Compass Lexecon team included David Sevy, Lorenzo Coppi, Martina Caldana, Thibaut de Bernard, Aleksandra Khimich, and Cecilia Nardini, supported by a team of analysts. The work before the Chilean competition authority also involved Fernando Coloma.