The European Commission said it has approved, under the EU Merger Regulation, the proposed $38 billion merger between the automotive companies Fiat Chrysler Automobiles N.V. (FCA) and Peugeot S.A. (PSA).

“The approval is conditional on full compliance with a commitments package offered by the companies,” said the Commission.

The merger will lead to the creation of the fourth largest automotive group in the world, to be called “Stellantis.”

To address the Commission’s concerns, FCA and PSA offered the following commitments:

• An extension of the co-operation agreement currently in force between PSA and Toyota Motor Europe for small light commercial vehicles under which PSA produces the vehicles for sale by Toyota under the Toyota brand mainly in the European Union.
• An amendment of the “repair and maintenance” agreements for passenger cars and light commercial vehicles in force between PSA, FCA and their repairer networks, to facilitate access for competitors to PSA and FCA’s repair and maintenance networks for light commercial vehicles.

Executive Vice-President Margrethe Vestager, responsible for competition policy, said: “Access to a competitive market for small commercial vans is important for many self-employed and small and medium companies throughout Europe.

“We can approve the merger of Fiat Chrysler and Peugeot SA because their commitments will facilitate entry and expansion in the market for small commercial vans.

“In the other markets where the two automotive manufacturers are currently active, competition will remain vibrant after the merger.”

In a joint statement, the companies said: “FCA and Groupe PSA warmly welcome the European Commission’s clearance authorizing the merger and the creation of Stellantis, a world leader in new mobility.”

Shareholders of both companies will meet separately on January 4 to approve the transaction.

FCA’s controlling shareholder is Exor, the holding company of Italy’s Agnelli family — while PSA’s big shareholders include the Peugeot family, the French government and China’s Dongfeng.