E.U. Court sides with UPS in blocked TNT deal

Earlier this week, a Luxembourg-based General Court annulled a European Union decision made back in 2013, to block Atlanta-based UPS’ proposed US$7 billion takeover of Dutch package delivery company, TNT Express. Even though the decision will not revise history, since TNT has already been acquired by FedEx Corp., the ruling could pave the way for UPS to take legal recourse against E.U. regulators, and sue for damages.

Back in 2013, regulators at the European Commission rejected UPS’ takeover of TNT, fearing that such consolidation in the market would harm consumers, particularly in Eastern Europe. UPS had earlier tried to convince regulators otherwise with offers to divest TNT subsidiaries in 17 E.U. countries, and give any buyers access to its European Air Network for a period of five years.

Still, the commission opined that the takeover would limit affordable access to express delivery in 15 E.U. member states. Referring to UPS’ divestiture attempts, “What they offered was simply not enough to address the serious competition problems we identified,” said Joaquin Almunia, the commission’s vice president of competition policy. After the failed deal, UPS paid TNT a termination fee amounting to $267.4 million.

Returning to the new ruling, the E.U. General Court found that UPS had not been given full disclosure of the econometric models the European Commission was using to identify markets of concern. “UPS might have been better able to defend itself if it had at its disposal, before the adoption of the contested decision, the final version of the econometric model chosen by the commission,” the court said.

In a statement to Reuters, UPS said it was pleased with the latest outcome. “While the decision in UPS’ favor makes a number of points, the most significant of this decision is its impact in helping to preserve a competitive environment in Europe by clarifying the procedure and relevant criteria for merger approval.”