US-based integrated express company UPS filed a lawsuit with the European Union’s General Court, seeking compensation for the European Commission’s 2013 decision to prevent UPS from taking over TNT.
At that time, the Commission ruled that a UPS takeover of TNT could lead to a UPS/DHL duopoly in the package delivery business in parts of Europe, with higher prices and restricted choice for consumers. But now, UPS is asking for €1.7 billion (US$2.15 billion), plus interest and tax, as “compensation for the losses suffered as a result of the acquisition being unfairly prohibited by the European Commission.”
UPS has been widely quoted in the financial press as saying “We feel strongly that the proposed acquisition (of TNT) would have constituted a good deal for logistics customers as well as B2C consumers. UPS continues to remain bullish on Europe.”
But how likely is it that UPS’ “strong feeling” will have much weight in a European court?
The European Commission is the EU’s competition regulator, and is one of the most powerful bodies in the EU. In the past, appeals to European courts against EC decisions have almost never succeeded, leading to a feeling among some in the European business and legal communities the EC is almost above the law. But there are two reasons to believe that UPS may have a chance of winning its case.
First, while European courts have historically been reluctant to overturn EC decisions, there have been a few appeals that succeeded. So, while the odds of having an EC decision overturned are not high, at least they are not zero.
Second, and more specific to UPS, in March 2017, the General Court of the EU overturned the EC’s decision to block UPS’ planned takeover of TNT on the basis that (to paraphrase) the EC decision had been based on a different set of rules than it had required UPS to play by. Of course, this was of small comfort to UPS, because, in the interim, the EC had allowed FedEx to do what it had said UPS could not, and TNT no longer existed as a standalone company to be acquired.
Regarding the amount, The Wall Street Journal quoted a UPS spokesperson as saying “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.”
The EC has said it will fight the demands in court and is also appealing General Court decision last year annulling its 2013 ruling, but the fact that the Court has already expressed the opinion that the EC acted improperly must give UPS grounds for hope.