In recent years, the automotive industry has experienced a number of mergers leading to the market becoming increasingly dominated by a few large firms, who by joining forces are only getting larger.
The proposed $50 billion merger between Fiat-Chrysler and PSA group now looks set to be completed in the next month, as long as it gets final approval from EU antitrust regulators.
The joining of forces between Fiat-Chrysler and PSA group would create the fourth-largest car manufacturer in the world, ensuring the growth a much stronger brand which could benefit from the sharing of knowledge and expertise, as well as a huge reduction in costs.
The merger of Fiat-Chrysler and PSA group, based in Italy and France respectively, would bring a host of well-known brands all under the roof of one automaker:
The two companies are now eagerly awaiting the announcement on whether the deal can go ahead or not. According to EU law, the competition regulators can approve the merger with or without conditions, or open up further investigation if they have serious concerns regarding how the deal may have a negative impact on consumers.
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term merger?
Q2. Explain why government intervention is needed in the merger between Fiat-Chrysler and PSA Group.
Q3. Assess the impact that the merger between Fiat-Chrysler and PSA group is likely to have on consumers in the market for automobiles.
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