Peugeot owner PSA and FCA will allow rivals to service vans at their joint dealerships as part of a package of concessions to allay EU concerns over the carmakers’ $50bn merger, paving the way for the deal to be cleared this year, according to people familiar with the matter.

In June, competition regulators in Brussels launched an in-depth investigation into the merger amid fears it threatened competition in Europe’s lucrative small commercial vans market.

Rather than selling any part of their combined van business, PSA has also pledged to expand a French van factory it shares with Toyota at Hordain to boost the Japanese carmaker’s presence in the fiercely competitive van market, as part of proposals submitted in Brussels on Friday.

PSA and FCA, whose combination would create the world’s fourth-largest carmaker, already share a van plant in Sevel, Italy, and their operations together account for a third of the European market. That is more than double the 16 per cent held by Renault or Ford, their closest competitors.

Under the proposed remedies, FCA and PSA will also allow rivals to use their extensive aftersales network, meaning that vans from other brands can be serviced at the dealer sites, according to two people familiar with the matter.

The concessions follow lengthy negotiations with the EU and should allow the deal to complete in the first quarter of 2021. The combined group will be larger than General Motors and Hyundai-Kia, making 9m cars a year and enjoying one of the most profitable vehicle line-ups in an industry that has been hit hard by the coronavirus pandemic.

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The EU has not yet set an official date when it will decide on the deal but the transaction is expected to be approved before the end of the year, according to two people familiar with the matter.

FCA and PSA declined to comment on specific remedies offered.

In a joint statement, they acknowledged the European Commission’s confirmation that the companies have “submitted proposals to address the questions raised by the EU authorities” in the merger review.

They added: “FCA and PSA continue to work constructively with the European Commission and all relevant competition authorities around the world.”

In drawing up the proposals, the companies have sought to offer concessions that protect or improve competition in the van market, without hurting a lucrative business and currently one of FCA’s most valuable European assets, according to people familiar with the matter. 

Scrutiny of the combined van unit had been expected when the deal was announced last year, because of the large market share the two groups have.

However, because of PSA’s heavy European exposure, and FCA’s dominance in North America, the overall global overlap of the two companies is relatively modest.

Via Financial Times