EU court rules regulator wrongly blocked UPS-TNT merger

07 Mar 2017


United Parcel Service (UPS) can potentially sue the European Union after an EU court ruled that the European anti-trust regulator had wrongly blocked its takeover of Dutch peer TNT in 2013.

In 2012, UPS, the world's largest package delivery and logistics company offered to buy TNT Express, after raising its bid to $6.85 billion (See: UPS to acquire European rival TNT Express for $6.85 billion).

UPS withdrew its offer after the European Commission (EC) said it would block the proposed merger on the grounds that the transaction would limit competition in the express-delivery segment in the 15 EU countries.

UPS then filed an appeal against the EC's decision of blocking the merger with the Luxembourg-based General Court since it believed that the ruling was "factually and legally erroneous."

TNT has since been acquired by UPS rival FedEx for €4.4 billion, which was approved by the EC last year.

UPS had offered concessions to the EC by agreeing to divest certain European business units and granting access to some of its airline network to rivals.

In order to ease antitrust concerns, TNT had also agreed to sell its airline operations to ASL Aviation Group, comprising TNT Airways and Pan Air Lineas Areas on condition that the sale would become effective immediately prior to completion of its proposed merger with UPS.

UPS had also agreed to sell some of its European assets to French state-owned La Poste SA's DPD parcel distribution unit, and divest a few of TNT's subsidiaries.

The EC rejected the concessions since DPD was a marginal player in the 15 EU countries unlike the four big competitors like UPS, TNT, DHL Express and FedEx.

The court said the EC had infringed UPS's rights of defence by using a different econometric model in its analysis than that used in previous exchange of views and arguments.

"UPS might have been better able to defend itself if it had at its disposal, before the adoption of the contested decision, the final version of the econometric model chosen by the Commission," the court said.

UPS could potentially now sue for damages, if it chooses to, but it will not be able to undo the FedEx-TNT merger.

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