EU Commission unfair to Rome: Italy's League on proposed Fiat-Renault merger

Criticising France over its handling of a proposed merger between Fiat Chrysler (FCA) and Renault, Italy's right-wing League party said on Monday that the way negotiations were proceeding showed the European Commission was unfair to Rome. Italian-American carmaker FCA is in intensive discussions with Renault and the French government over the $35 billion merger proposal it pitched last Monday to create the world's third-biggest carmaker.

Claudio Borghi, the League's economics spokesman, said France should sell its stake in Renault to reduce a budget deficit which exceeds EU limits, rather than negotiate board positions in a predominantly private company. Paris holds a 15% stake in Renault and has sought a number of guarantees from the carmakers to support their merger, including representation on the combined company's board.

"Doesn't the European Commission have anything to say about this?" Borghi said in an interview with Reuters. "By what right, in the Europe of liberalism and privatisations, can the French state negotiate seats on the board of a car company?" he asked. Borghi added that the merger must not involve any job cuts in Italy, otherwise the Rome government would intervene. The League, led by Deputy Prime Minister Matteo Salvini, and its governing coalition partner have faced repeated criticism from Brussels for not doing enough to curb Italy's public deficit. They have also clashed with France on a range of issues from immigration policy to a high-speed rail link.

The League took 34% of the vote at European parliamentary elections on May 26, more than any other Italian party and trouncing its partner, the anti-establishment 5-Star Movement. Since the ballot, it has stepped up its criticism of Brussels and its calls for changes to EU rules. Borghi said France's meddling in the automotive merger talks and Brussels' tolerance of it, showed the current system was stacked against Italy. "This is yesterday's Europe, where there are only obligations for Italy while the rules don't exist for all the others. From now on things have to change."

FCA is discussing the payment of a special dividend to Renault shareholders and stronger job guarantees in a bid to persuade the French government to back the proposed merger, according to sources close to the talks. The improved offer would also see the combined company's operations headquartered in France and the French state granted a seat on its board, the sources say. 

(With inputs from agencies.)