Fiat Chrysler has said talks with Peugeot to create the globe’s fourth largest carmaker were going well, despite a racketeering lawsuit filed by General Motors late on Wednesday, seeking “substantial damages”.

Reuters reported GM had filed a lawsuit against Fiat Chrysler alleging its rival bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars.

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“Talks are progressing smoothly,” a FiatChrysler spokesman told the news agency about ongoing talks with Peugeot on Thursday.

In a letter to employees cited by Reuters, Fiat Chrysler chief executive Mike Manley said: “We are astonished by this filing, both its content and its timing. We can only assume it was intended to disrupt our proposed merger with PSA.”

FiatChrysler would vigorously defend itself against this “meritless” lawsuit, the letter, seen by Reuters, added.

“I am sure you have all read this statement but I also wanted to reach out to you on a personal level to assure you that we will not be slowed down by this act,” Manley reportedly said.

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