The European Commission has extended the deadline for the completion of its “Phase II” investigation into FedEx’s planned €4.4 billion takeover of TNT.
At the end of last month, it announced that a full investigation was necessary due to competition concerns and gave itself '90 working days, until 7 December 2015 to determine whether these initial concerns are founded.'
However, a spokesperson for the European Commission's Competition Policy directorate has confirmed to CEP- Research that the deadline had been extended until 13 January.
"The parties have requested a 20-day extension for the phase II investigation, as they are entitled to do according to the Merger Regulation," explained Ricardo Cardoso, the spokesperson for Competition Policy of the European Commission.
Re-iterating the Competition Policy directorate spokesperson's remarks, a TNT official said the extension had been granted by the parties (FedEx and TNT) in accordance with the procedure set out in the EU Merger Control Regulation.
"We continue to work constructively with the Commission to obtain clearance of the transaction. We still expect the transaction to close in the first half of 2016 as indicated previously," he added.
“The extension has been granted by the parties in accordance with the procedure set out in the EU Merger Control Regulation. We continue to work constructively with the Commission to obtain clearance of the transaction," a FedEx spokesperson told CEP Research.
In a statement on the investigation issued on 31 July, Commissioner Margrethe Vestager, in charge of competition policy, commented: "Many businesses, and in particular e-commerce, rely heavily on affordable and reliable small package delivery services, and many consumers depend on these services to ensure rapid and safe delivery of goods they have bought. The Commission must therefore make sure that FedEx's takeover of TNT would not impede effective competition and would not lead to higher prices for consumers."
The Commission said its initial investigation has shown that small package delivery services can be divided into several segments, depending notably on whether the destination is in the European Economic Area (EEA) or beyond and on whether the timing of the delivery is express or 'deferred'.
"The Commission's preliminary investigation indicates that the other 'integrators' would be the only significant competitive constraint on the merged entity for most international express services, with a destination within or outside the European Economic Area (EEA). As the proposed transaction would reduce the number of 'integrators' competing in the EEA from four to three, the competitive constraint on the merged entity would be significantly reduced, leading to a concentrated market in several Member States for international express delivery services to a destination within or outside the EEA," the statement added.
"FedEx and TNT also provide international 'deferred' services outside the EEA. The Commission's initial market investigation showed that the merged entity would have very high market shares for services to some destinations leading to potential competition concerns."
An indication of how far-reaching the potential implications are of the proposed FedEx-TNT deal, the New Zealand state Commerce Commission has published 'a statement of preliminary issues, outlining the key competition issues that the Commission currently considers will be important in deciding whether or not to grant clearance.'
The Commission 'invites submissions from parties who consider that they have information relevant to the Commission’s consideration of this matter which must be submitted by 26 August 2015.'
It is aiming to make its decision by 25 September 2015 but notes that this date may change as the investigation progresses.
