[270218.EN.BIZ] UPS Sues EU Over Banned TNT Merger After Court Invalidates Ban

ATLANTA's United Parcel Service (UPS) is suing the European Union for EUR1.7 billion (US$2.1 billion) in damages after regulator vetoed its acquisition of TNT Express in 2013, reports American Shipper.

UPS had made a EUR5.16 billion offer for Netherlands-based TNT, but EU regulators vetoed the deal on the grounds that it would concentrate too much power in one courier company since a series of smaller acquisitions had already given UPS a strong presence in many EU countries.

UPS argued that competition was still strong in areas of the EU where most parcel delivery activity takes place and proposed selling off assets, in countries where there were overlaps to alleviate concerns that consumers would pay more as a result of the deal.

UPS appealed the European Commission's decision, which was overturned by an EU court in March 2017 after the EU General Court found the commission had failed to inform the company that it had changed the economic models used to weigh the impacts of a given merger.

But that helpful ruling came too late - months after TNT was purchased by UPS' rival FedEx for $4.8 billion. The takeover put FedEx on par with UPS in offering customers complete supply chain services in all geographic regions.

The reason the EC approved the FedEx-TNT deal and not the UPS bid, was that FedEx had a much smaller market share in Europe.

As such, UPS is asking the court to compensate the company and "be put in the position it would have been in had the unlawful decision not been adopted," the company reportedly said in a filing with the EU's General Court, as blocking the deal prevented UPS "from materialising the benefits associated with that proposed transaction.

"The compensation being sought corresponds to what we believe, through objective assessments verified by expert third parties, to be the value of the opportunity wrongly prohibited by the European Commission," UPS said in a statement.

For its part, the European Commission is appealing the EU General Court's ruling to overturn the UPS-TNT deal. According to Bloomberg, the commission has taken the case to the EU's highest tribunal, arguing that the General Court's judgment gives regulators less freedom in the approval process.

Source : HKSG.