European regulators reject Volvo-Scania merger

STOCKHOLM, Sweden (March 15, 2000) — The European Commission yesterday rejected Volvo AB’s planned $6.9 billion US merger with rival Swedish truck and bus maker Scania over concerns that it would be anticompetitive.

The unanimous decision was based in part on a report that the combined companies would own 50% to 90% market shares in several European countries. While Volvo is not allowed to combine operations, its 45.5% ownership of Scania is not affected by the decision. Volvo has said it does not plan to sell its stake in the company; shares purchased from stockholders that accepted Volvo’s takeover bid will be returned, however.

The commission’s decision sparked rumors about how Volvo would react. Some market analysts have said Volvo may put itself up for sale, a strategy Volvo CEO Leif Johansson would consider.

“We will evaluate the alternatives both in Europe, North America and Asia,” he told journalists during a conference call. “We have as an overall strategy to make sure that we are among the world’s biggest in all our business areas. … We certainly feel that we have the opportunity as a company to be in the driving seat to make acquisitions but we have also said that if good proposals come from outside, whatever the structure, we will look at them.”