UPS sues EU over scuttled TNT deal

Atlanta-based integrator United Parcel Service Inc. (UPS) is seeking 1.7 billion euros (U.S. $2.1 billion) in damages after regulators in the EU vetoed its acquisition of European parcel carrier TNT Express, according to multiple media reports.    United Parcel Service Inc. (UPS) is suing the European Union over its attempted acquisition of Netherlands-based parcel carrier TNT Express, according to multiple media reports.
   According to Bloomberg news service, which seems to have been first to report the story, the Atlanta-based integrator and third-party logistics provider is seeking 1.7 billion euros (U.S. $2.1 billion) in damages and compensation after regulators in the EU blocked the company’s takeover of TNT in 2013.
   UPS had made a 5.16 billion euro offer for TNT, but regulators in the EU vetoed the deal on the grounds that it would concentrate too much power in one courier company since a series of smaller acquisitions had already given UPS a strong presence in many EU countries.
   Unsurprisingly, the company vehemently disagreed at the time, arguing that competition was still strong in areas of the EU where most parcel delivery activity takes place. UPS also proposed substantial remedies, including selling off assets, in countries where there were overlaps to alleviate any concerns that consumers would pay higher prices as a result of the deal.
   UPS appealed the European Commission’s decision, which was overturned by an EU court in March 2017 after the EU General Court found the commission had failed to inform the company that it had changed the economic models used to weigh the impacts of a given merger.
   That ruling, however, came several months after TNT was purchased by UPS arch-rival FedEx Corp. for $4.8 billion. The takeover was somewhat of a culmination of an expansion spree by FedEx designed to put it on par with UPS in offering customers complete supply chain services in all geographic regions, and followed the $1.4 billion purchase of GENCO, a large U.S. third-party logistics provider that specialized in warehousing, packaging, e-commerce fulfillment and reverse logistics; and the acquisition of e-commerce technology specialist Bongo International.
   The primary reason the EC approved the FedEx-TNT tie-up – as opposed to UPS’s bid – was that FedEx had a much smaller market share in Europe. In fact, the commission said in its initial decision against UPS that FedEx did not represent a significant European competitor that could counteract a UPS-TNT tie up.
   Barring rapid advancements in time travel technology, however, the EC cannot go back and undo the damage done, despite the EU General Court’s decision to overturn the commission’s 2013 ruling.
   As such, UPS is asking the court to compensate the company and “be put in the position it would have been in had the unlawful decision not been adopted,” the company reportedly said in a filing with the EU’s General Court, as blocking the deal prevented UPS “from materializing the benefits associated with that proposed transaction.”
   “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,” UPS said in a statement, according to a report from Bloomberg.
   The European Commission, meanwhile, continues to appeal the EU General Court’s ruling to overturn the UPS-TNT deal. According to Bloomberg, the commission has taken the case to the EU’s highest tribunal, arguing that the General Court’s judgment gives regulators less freedom in the approval process.