UPS has appealed against the European Commission’s January decision to block its merger with TNT Express, saying it fears the Commission’s reasoning could hinder its efforts to expand through acquisitions in Europe.
The European competition commissioner barred the US delivery group’s proposed €5.2bn takeover of its Dutch peer after a nine-month investigation, saying it would result in too much concentration in the European express delivery market.
The appeal to the European General Court in Luxembourg is likely to last years. A UPS spokesperson said the company was not seeking to renew its bid for TNT Express, but wanted to ensure that the commission’s decision “couldn’t be used as a precedent for decisions on future acquisitions”.
UPS has said since the failure of the TNT Express takeover that it still plans to expand in Europe, in part by acquiring other companies. The company said the filing of the appeal last week was prompted by a legal deadline to challenge the ruling.
In rejecting the merger, the commission found that UPS and TNT Express were both so-called “integrators”, combining extensive air and ground capabilities. It separately examined whether the merger would lead to reduced competition in each European national market, an approach that could present problems for any future efforts by UPS to acquire companies with a significant market share in an individual country.
TNT Express said it “has taken note” of the appeal but did not expect a renewal of the takeover offer.
The failure of the merger was a severe blow to the Dutch group, which has been forced to revisit its strategy as a standalone company with its shares hovering 40 per cent below UPS’s €9.50 offer. TNT Express announced this month that it had sold its Chinese domestic delivery operations, and plans to divest its Brazilian operations in order to refocus on Europe, where it competes with Germany’s DHL for the leading market share.
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