United Parcel Service Inc. (UPS:US)’s bid for TNT Express NV (TNTE) and Hutchison Whampoa Ltd.’s pending purchase of Orange Austria Telecommunications GmbH need “substantial remedies” to settle antitrust concerns, the top European Union competition official said.
“Our preliminary view is that serious competition concerns would arise in both cases, and substantial remedies are needed,” Joaquin Almunia said in prepared remarks for a speech yesterday in Cernobbio, Italy.
UPS, the world’s largest package-delivery company, received antitrust objections from regulators last month listing possible issues with the takeover of Hoofddorp, Netherlands-based TNT -- a 5.16 billion-euro ($6.62 billion) deal announced in March that would double its size in Europe.
“We are committed to the transaction and look forward to the confidential discussions with the EU over the coming weeks to address the concerns,” Peggy Gardner, a spokeswoman for Atlanta-based UPS, said in an e-mail.
A TNT spokesman, Cyrille Gibot, said late yesterday that he was unable to comment until he had seen the full content of the speech. The Dutch company and UPS remain in conversation with competition authorities.
Hutchison (13), based in Hong Kong, has made additional concessions over its bid for mobile-phone operator Orange Austria in an attempt to soothe European Commission concerns on the deal.
The EU’s merger review can require companies to divest businesses or change the way they do business to eliminate concerns a combined firm could unfairly squeeze rivals or increase prices.
The bloc’s scrutiny of Glencore International Plc (GLEN)’s $33 billion takeover bid for Swiss mining company Xstrata Plc (XTA) is “well advanced,” Almunia said in the speech. Regulators will soon decide whether to approve the deal or open an in-depth investigation after they receive feedback from a market survey of the companies’ unspecified concessions, he said.
An EU decision will come “in a few days” on whether an offer from Finland’s Outokumpu Oyj (OUT1V) to sell an Italian steel plant is enough to allow regulators to approve its purchase of ThyssenKrupp’s Inoxum unit, Almunia said.
Regulators focus less on merged companies’ high market share, which is “not always problematic,” Almunia said, and examine how a deal affects pricing, quality, choice and innovation. Companies’ claims that a deal benefits the wider economy, in terms of prices or innovation, will be looked at with great care, he said.
The EU plans to simplify merger filings in uncomplicated transactions next year, Almunia said. The revised rules may also see regulators examine non-controlling minority stakes for the first time, he said.
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