Wednesday, January 16, 2013

UPS Drops Planned Acquisition of TNT Express in Light of EC Concerns

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

United Parcel Service, Inc. (UPS) announced on January 14 that it is dropping its plans to acquire competing delivery company TNT Express N.V. in response to European Commission (EC) antitrust concerns over the deal. UPS said that the EC had informed the companies that it was working on a decision to prohibit the transaction. Upon prohibition by the EC, UPS will withdraw its offer and pay the Dutch firm € 200 million.

According to a statement from TNT released today, the EC case team investigating the proposed acquisition informed the companies that on the basis of UPS’s current remedy proposal it was working towards proposing a prohibition decision. TNT went on to say that it was informed that UPS “sees no realistic prospect that EC clearance can be obtained and that UPS will not pursue the transaction on any other basis.”

In March 2012, the parties announced the proposed transaction to “create a global leader in the logistics industry.” The parties had initially hoped to complete the acquisition by the end of 2012.

The EC disclosed in July 2012 that it had opened an in-depth investigation into the combination. At that time, the EC said that its preliminary investigation indicated potential competition concerns in the markets for small parcel delivery services, in particular international express services, in numerous member states, where the parties would have very high combined market shares.

The parties announced in October that they had received a statement of objections from the EC. The parties offered proposed remedies to resolve the EC's concerns regarding the competitive effects of the proposed merger on the international express small package market in Europe. Obviously, the commitments were not enough to resolve the antitrust concerns. The EC has until early February to issue its decision.

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