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UPS Responds To Released Report On The Blocking Of TNT Express

May 7, 2014 - The European Commission (EC) today published the summary of its 2013 decision to block the acquisition of the Dutch company, TNT Express by United Parcel Service, Inc. (UPS). 

Both companies provide small package delivery services, air and road cargo transport, freight forwarding and contract logistics. The European Commission has prohibited under the EU Merger Regulation the proposed acquisition of TNT Express by UPS. 

The Commission found that the takeover would have restricted competition in 15 Member States when it comes to the express delivery of small packages to another European country. 


The commission stated that in these Member States, the acquisition would have reduced the number of significant players to only 3 or 2, leaving sometimes DHL as the only alternative to UPS. The commission further stated the concentration would therefore have likely harmed customers by causing price increases. During the investigation, UPS offered to divest TNT's subsidiaries in these 15 countries and allow the buyer to access its intra-European air network for five years. 

The Commission carried out an in-depth assessment, including a market test where customers and other interested parties were consulted. However, these remedies proved inadequate to address the identified competition concerns. 

Commission Vice President in charge of competition policy Joaquín Almunia said “Many businesses active in the EU Single Market need to send small packages to another European country with guaranteed delivery on the next day. This requires access to affordable, reliable services that truly fit their needs. These businesses would have been directly harmed by the takeover of TNT by UPS because it would have drastically reduced choice between providers and probably led to price increases. We worked hard with UPS on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems we identified". 



UPS has responded by releasing a statement that reads as follows. - The EC's analysis recognized that 95 per cent of the combined UPS and TNT business was not problematic. Additionally, there were no concerns in the countries that drive 80 per cent of European Union (EU) GDP, namely France, Spain, Germany, Italy and the UK. In the 15 countries where concerns were identified, UPS proposed significant and tangible remedies. 

With its decision, the EC prevented a sizeable investment in Europe of approximately EUR 5.2 billion ($6.8 billion), better services and pricing, and more important, an improvement of the European logistics infrastructure in those economies that are still struggling to return to economic growth. 

In April 2013, UPS appealed the EC's decision to block the transaction for several reasons: the decision was not based on an accurate assessment of the multi-product nature of customer contracts, it erroneously focused on a single product (next day cross-border shipments), ignored significant evidence from UPS and TNT about the strength and number of other competitors, and considered only a fraction of the efficiencies that would have been created following the acquisition.
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