One possible hurdle to the Fiat-Chrysler alliance has now been cleared with the official announcement yesterday from the European Commission that after examining the issue it has concluded that the alliance will not raise any anti-competitive issues.

EU statement:

"The European Commission has cleared under the EU Merger Regulation the acquisition of the US-based vehicle manufacturer Chrysler Group LLC by Fiat S.p.A. of Italy. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

"Chrysler produces and sells cars and trucks under the brand names Chrysler, Jeep and Dodge. Chrysler does most of its business in North America where it derives more than 90% of its turnover. It does not have any manufacturing facilities of its own in the EEA. Fiat is a diversified Italian industrial group engaged principally in the manufacture and sale of passenger cars (Fiat, Lancia, Alfa Romeo, Abarth, Maserati and Ferrari), agricultural and construction equipment (CNH Case New Holland), trucks and industrial vehicles (Iveco), and automotive components (FPT Powertrain Technologies, Magneti Marelli and Teksid). On 30 April 2009 Chrysler filed for protection from its creditors under Chapter 11 of the US Bankruptcy Code and announced plans for a global strategic alliance with Fiat. On 10 June 2009, after a judicial procedure, the company formerly known as Chrysler LLC sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.

"Fiat has acquired an initial 20% equity interest in Chrysler and entered into a number of agreements with the company to provide it with access to certain Fiat technology, platforms and power trains. Despite Fiat’s stake of only 20% in Chrysler, which it may increase in future, Fiat holds rights in the decision-making process of Chrysler that will enable it to exercise sole control over Chrysler.

"The Commission’s examination of the transaction showed that the horizontal overlaps between the activities of Chrysler and Fiat are limited. The merger would therefore not significantly change the competitive structure of the markets for the manufacture and supply of passenger cars. The Commission also examined the possible vertical effects arising from the acquisition in light of Fiat's presence on a number of markets such as automotive lighting and transmission systems that are purchased by manufacturers of passenger cars. The Commission's examination showed that the transaction would not lead to competition concerns for two main reasons. First, as Chrysler is not present on the upstream markets concerned, the transaction would not strengthen the market position of the merged entity or the extent of its vertical integration. In a similar manner, given Chrysler's relatively limited presence in the EEA on the passenger car market, the merger would not significantly enhance the merged entity's market position and it would therefore not have the ability or incentive to restrict its competitors' access to the inputs necessary for their vehicle production."