STOCKHOLM, Sweden-- The European Commission has rejected Volvo's planned $6.9 billion merger with rival Swedish truck and bus maker Scania as anticompetitive.
The commission, which is the executive arm of the 15-member European Union, said the merger "would have caused serious competition concerns by creating dominant positions" in several sectors, including the heavy truck and bus markets in Sweden, Denmark, Norway, Finland and Ireland.The commission ruled that a combined market share, which it estimated would range from 50 percent to 90 percent, would raise barriers to entry or expansion in those markets.
"The merger would therefore significantly change the market structure to the detriment of the customers," the commission's decision said.
The proposed merger, announced in August, would have created the world's second-largest truck and bus maker, behind DaimlerChrysler.
Volvo, which is based in Goteborg, had lobbied hard for approval, offering to open its extensive truck retail and service network to competition and to reduce its market share. But the commission rejected the concessions.
Volvo's chief executive, Leif Johansson, expressed regret over the decision, saying it seemed "to go against the basic concept of the common market."
Volvo currently holds 45.5 percent of Scania and will retain its stake for now, according to a statement issued before the commission made its decision public.
"We will now follow the continuing developments, but in the short term we foresee no need to divest our shares in Scania," Johansson said.
The two companies will pursue other forms of cooperation, Volvo said.