By Jessica Sier
Shares in Fiat Chrysler Automobiles NV and Peugeot SA slumped on Tuesday, after reports emerged that EU competition authorities see issues in the light commercial vehicle market and may prolong a judgment on the proposed merger.
Fiat Chrysler shares were down 3.7% to 9.06 euros ($10.23), while Peugeot was down 4.8% to EUR14.82 at 1130 GMT.
Investors are reacting to a Reuters report on Monday, which said regulators are looking at how a combination of the two car makers' small commercial vans operations would affect an important and profitable segment of the European vehicle market.
Citing sources, the story indicates the watchdog may demand concessions, such as requiring the companies slice off different pieces of their light commercial vehicle businesses to preserve competition.
As it stands, Fiat Chrysler and Peugeot already produce vans through a joint-venture called Sevel, which is the largest assembly plant for vans in Europe.
"Hiving off overlapping light commercial vehicle businesses could prove tricky to execute," said Timm Schulze-Melander, industrials specialist at Redburn.
Peugeot was hoping that deals to produce light commercial vehicles for competitions, like the one signed with Toyota earlier this year, would be enough to placate concerns over market share, said Mr. Schulze-Melander.
In 2019, and before the coronavirus pandemic, the companies would have had a 33% combined market share in western Europe, according to Redburn.
The European antitrust regulators said they would deliver a preliminary judgment by June 17 on the proposed merger, which would create the world's fourth largest automotive company, but if the companies do not address the concerns the deal could face a four-month investigation.
Fiat Chrysler declined to comment, while Peugeot and the European Commission didn't respond in time for publication.
Shares in Peugeot and Fiat Chrysler have rallied hard in recent weeks, as global investors rotate into value stocks which were dramatically de-rated during the coronavirus lockdowns and resulting economic squeeze.
While Peugeot and Fiat Chrysler shares are still down around 31% and 32% for the year respectively, they have both recovered more than 55% since the trough on March 18, according to data by FactSet.
Write to Jessica Sier at firstname.lastname@example.org