UPS and TNT Express today confirmed that assets could be sold and the air network opened up tocompetitors in order to overcome the European Commission’s objections to UPS’ €5.16 billion
takeover of TNT Express.The proposed remedies, which were submitted to EC officials this week, “comprise the sale ofbusiness activities and assets in combination with granting access to air capabilities”, the twocompanies said in a joint statement. “Eligible buyers of these activities will have to ensure thelong-term viability of the divested activities and continuity of customer service.” As part of theapproval process, the EC will market-test the remedies on a confidential basis.
UPS and TNT said that the proposed remedies aim to address the EC’s concerns regarding thecompetitive effects of the intended merger on the international express small package market inEurope. They stressed that they continue to be fully committed to the merger and are workingclosely with the EC in order to gain competition clearance allowing completion of the transactionin early 2013.
No further details of the confidential discussions or proposed remedies will be revealed at thisstage, the two companies stressed. “The discussions are ongoing, which means that the offeredremedies may be subject to change,” they added.
In accordance with EU Merger Regulation, the timing of the remedies submission extends the EC’sreview period by 15 business days to 5 February 2013. The offer of remedies does not change theterms and conditions of the Offer by UPS for TNT Express.
UPS and TNT Express also stressed they will follow the required consultation and adviceprocedures with their works councils with regard to these remedies.
Reiterating the benefits of the planned merger, UPS and TNT Express said they believe theirmerger will help create a more efficient logistics market, thereby improving the competitiveness ofEurope and the solutions offered to businesses and consumers. “Customers and consumers will benefitfrom a broader portfolio of services and better global access, along with lower supply-chain costsoverall and improved service levels in terms of timing and reliability,” they stated.
Bloomberg reported yesterday that UPS has been in talks with La Poste’s DPD parcel unit as apotential buyer of assets and network access customer, and has also held informal talks with RoyalMail subsidiary GLS and with FedEx, although the latter is apparently trying to block the TNTdeal.
The European Commission last month issued a confidential Statement of Objections to the UPS –TNT merger after conducting an extremely detailed in-depth investigation in recent months. EUCompetition Commissioner Joaquín Almunia said at the start of November that the case raised “serious competition concerns” and “substantial remedies” were needed.
