TURIN -- PSA Group and Fiat Chrysler Automobiles will continue to operate as competitors until their planned $50 billion merger gets approval by the various antitrust authorities around the world, a process that could take over a year.
Nine PSA and FCA working groups have been meeting since late October meet regularly to agree on a binding memorandum of understanding that could be signed in coming weeks, possibly before Dec. 25.
In two separate communications sent to employees through internal channels and seen by Automotive News Europe, the two companies told employees that members of the work groups are continuing to pursue the goals of their respective companies. "FCA and PSA will remain competitors until the merger process is completed," the internal memos said.
Respecting antitrust obligations until the merger is completed and operational, particularly stringent in Europe, is crucial to avoid hefty EU fines
In April, EU cartel regulators charged BMW, Daimler, Volkswagen brand, Audi and Porsche with colluding to block the rollout of cleaner emissions technology between 2006 to 2014. The European Commission said the collusion took place during technical meetings held by the "circle of five."
In May, BMW made a provision of more than 1 billion euros for a potential antitrust fine.
In April, the EU said it had fined car safety equipment makers Autoliv and TRW 368.3 million euros ($405.5 million) for setting up an illegal cartel to supply car seat belts, airbags and steering wheels to Volkswagen Group and BMW in Europe.
PSA said it expects the merger to take between 12 and 14 months after signing of a memorandum of understanding. If this is signed in December, the merged company could start operations between the end of 2020 and early 2021 with its headquarters in the Netherlands.
The two companies' working groups cover areas such as product development, manufacturing, synergies, purchasing, legal issues and human resources
The groups have more than 50 members equally divided on both sides, a person familiar to the talks told ANE.
The working groups are led by PSA's program and strategy chief, Olivier Bourges, and by FCA's business development chief, Doug Ostermann.
PSA's Bourges said in an internal document that the working groups are moving rapidly toward the first objective: the signing of the memorandum of understanding.
"We have paved the way for the creation of a new group that will occupy a position of global leadership in the sustainable mobility sector to meet the needs of all types of customers," he wrote in the document.
Bourges said the merger could not be happening at a better time given the period of profound changes that are currently underway in the automotive sector. "In a rapidly changing environment, this operation is a fundamental opportunity for the global development of PSA and FCA," he wrote.
FCA's Ostermann was quoted in document as saying: "Both sides are very motivated to come up with a plan that is successful, and we are making excellent progress towards the final goal. FCA and PSA will leverage all their research and development resources to promote a future of innovation."
FCA Chairman John Elkann last week said he was not worried by a U.S. lawsuit from General Motors against FCA and that he was confident of reaching a binding merger deal with PSA by the end of this year.
Reuters contributed to this report