Bloomberg News

UPS Faces Extended EU Antitrust Review Over Bid for TNT

July 20, 2012

United Parcel Service Inc. (UPS:US), the world’s biggest package-delivery company, faces an in-depth European Union antitrust review over its bid for TNT Express NV. (TNTE)

The deal may reduce the number of so-called integrated express delivery services from four to three across Europe, the European Commission said in an e-mailed statement. It extended the deadline to rule on the deal until Nov. 28.

“The proposed acquisition could in particular reduce competition for the provision of the fastest express delivery services, to the detriment of direct customers and ultimately of European consumers,” EU Competition Commissioner Joaquin Almunia said in the statement.

UPS is seeking to expand in Europe with the biggest deal in its 105-year history. It will vault to equal footing there with Deutsche Post AG (DPW)’s DHL, the market-share leader. The tie-up with money-losing TNT will immediately add to earnings on an adjusted basis once the deal is done, the company said in March.

Atlanta-based UPS said earlier this month it expects the acquisition to close in the fourth quarter because EU regulators needed more time to examine the impact of the deal. It plans to extend its 5.16 billion euros ($6.3 billion) cash offer for TNT beyond Aug. 31.

“We have to wait and see what’s going to happen,” said Anton van der Lande, a Brussels-based UPS spokesman. “We retain dialogue with the commission and remain confident that we will receive clearance.”

Regulators said there are potential competition concerns for small parcel delivery services, in particular international express services, in several European countries where the companies would have very high combined market shares.

Fastest Options

Delivery services compete on market segments for a promised delivery timeframe, they said, and integrators such as DHL and FedEx Corp. would be the only main rival to the combined company for most express services, especially the fastest options.

“During the next two weeks, UPS and TNT Express will continue to have a dialogue with the commission,” said Ernst Moeksis, a Hoofddorp, Netherlands-based TNT spokesman.

He said both companies “remain confident that we will receive clearance for the proposed acquisition within the fourth quarter.”

Non-Europeans

UPS will have to sell at least 51 percent of TNT’s air freight business, under EU rules which stipulate that European airlines can’t be majority-owned by non-Europeans. Spokesmen for Cargolux Airlines International SA, Europe’s biggest air freight-only carrier, and AP Moeller-Maersk’s Star Air, which provides services for UPS in Europe, have both ruled out a bid for the unit.

Ken Allen, the head of Deutsche Post’s DHL Express unit, said in an interview that his division has no interest in acquiring units divested by UPS.

TNT’s acquisition will likely increase prices for express deliveries in Europe, as the number of competitors in the field falls, he added.

To contact the reporters on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Anthony Aarons at aaarons@bloomberg.net


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  • UPS
    (United Parcel Service Inc)
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