UPS appears to have missed the deadline for any appeal against the European Commission's (EC) green light on the proposed merger of FedEx-TNT.
Under the EU Merger Regulation, FedEx’s planned €4.4 billion acquisition of TNT was unconditionally cleared by the European Commission on January 8, 2016.
Asked yesterday by CEP-Research whether the company had made or is considering an appeal to the ECJ over the Commission’s approval of the FedEx-TNT, a UPS Europe spokesman responded: “It is impossible to take a view as the European Commission has not yet issued the full text of its decision.”
CEP-Research understands that the EC is working on the full text but it remains unclear when this will be published.
Explaining its approval for the proposed takeover of TNT by FedEx, the EU regulatory authority stated in a press release on January 8 that, for intra-Europe express deliveries, “FedEx and TNT are not particularly close competitors and the merged entity will continue to face sufficient competition from its rivals in all markets concerned”, in particular DHL and UPS.
The Commission said it had carried out a price concentration analysis “which is in line with the approach in the UPS/TNT case” and also found that the transaction “will give rise to verifiable, merger-specific efficiencies due to network cost savings which will benefit customers”.
UPS recently lost an appeal in Brazil against regulatory approval for the FedEx-TNT deal and is reportedly considering an appeal in China should the regulatory authorities approve the proposed takeover.
FedEx and TNT have repeatedly stated that they expect the deal, which has a ‘long-stop date’ of June 6, to complete in the first half of this year.
In a separate case, UPS wants Europe’s top court to overturn the European Commission’s veto of its bid three years ago for TNT.
UPS confirmed to CEP-Research yesterday that the ECJ held a hearing last Wednesday (April 6) on its appeal made in April 2013 against the European Commission’s decision in January 2013 to block its €5.2 billion offer for TNT. “We are not aware of further hearings being scheduled. The timing of any decision is up to the ECJ,” a UPS Europe spokesman said.
In its filing made on April 5, 2013, UPS called on the court to “annul in its entirety” the Commission’s decision of January 30, 2013, to prohibit its proposed acquisition of TNT.
Brussels blocked the deal on the grounds that a UPS-TNT merger would leave only DHL Express as a major competitor in the intra-Europe air express market, with FedEx seen as a small player in Europe.
But UPS claimed the Commission had “committed an error of law and a manifest error of assessment when examining the likely price effects of the concentration” and had erred in concluding, without substantive evidence, that the merged entity's potential price increases would be accommodated by the rival to the merged entity.
The US company also criticised how the Commission had evaluated efficiencies from a UPS-TNT merger, the Commission’s competition definitions, its conclusion that “competitors who are not close competitors could not expand to constrain effectively the merged entity in the foreseeable future” and its analysis of “customers' ability to restrain the merged entity”.
However, UPS already made clear in April 2013 that the legal action was aimed at clarifying legal issues but did not signal any interest in a renewed move for TNT.
