Wednesday, October 24, 2012

Big Brown Europe Deal Blowing Up?

EU regulators file antitrust objections to UPS acquisition of TNT Express.

As reported here previously, UPS continued its push toward world dominance in the package delivery sector with its purchase in March of Netherlands-based TNT Express for $6.7 billion in cash. The deal will double UPS’s size in Europe, and vault it to equal footing there with Deutsche Post’s DHL, the market share leader.

Now the European Union’s Competition Commissioner, Joaquin Almunia, plans to review whether the combined firm would be “challenged enough” by DHL and FedEx. The EU noted the merger would reduce from four to three the number of companies that control pan-European parcel transport networks. Asked for more details by Bloomberg News, European Commission spokesman Antoine Colombani in Brussels declined to comment further.

UPS and TNT will respond to the European Commission’s concerns expressed in the complaint within a few weeks, the companies said in a joint statement on October 19, but wouldn’t comment on the specifics of the EU’s objections. “UPS and TNT believe competition in Europe continues to be significant, coming from multiple players who offer similar services,” the companies said.

As they move toward a scheduled consummation of the transaction early in 2013, UPS is likely to offer concessions to ease antitrust concerns, sources said. With DHL, the European market leader, owned by the German quasi-governmental Deutsche Post, regulators can be expected to take a hard look at any restraint of trade caused by the UPS/TNT connection.

Shippers in the US might welcome the opportunities afforded by a parcel market with three strong competitors, rather than the small package duopoly of UPS, the world’s largest package delivery firm, and FedEx, who together dominate the sector in this country.

Kirk Shearer
800-989-0054 x103

No comments: