EC begins second phase of FedEx-TNT deal review

The European Commission will now conduct an in-depth analysis under the EU’s merger regulations before coming to a decision on FedEx’s $4.8 billion offer to buy TNT.    The European Commission has entered the second phase of its review of FedEx’s proposed $4.8 billion offer to acquire all the shares of TNT Express.
   This is the step during which the European Commission will conduct an in-depth analysis under the EU merger regulations before coming to a decision. The transaction is also under review by other antitrust agencies, such as China’s Ministry of Commerce and Brazil’s Conselho Administrativo de Defesa Econômica.
   “We will continue to work together with TNT Express to meet the European Commission’s need for additional due diligence and are confident that the combination of both companies will increase competition and create benefits for customers,” said David Binks, president of FedEx Express for Europe, in a statement Friday. “We continue to make progress on all of the necessary regulatory steps around the world that would allow us to complete this transaction in the first half of 2016 and unite two great teams that share a passion for customer service.”
   On June 26, FedEx started the formal process to obtain merger control approval from the European Commission by requesting regulatory approval for its acquisition of TNT. The company also submitted a request for review and approval with the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) on June 26, as required under Dutch law. “Based on the required steps and subject to the necessary approvals, closing of the offer is anticipated in the first half of 2016,” FedEx said.
   EU regulators blocked UPS’ takeover of TNT in January 2013 on the grounds that the deal would concentrate too much power in one courier company since UPS already had a strong presence in many European countries after a series of smaller acquisitions. 
   FedEx currently has a much smaller market share in Europe, compared to the other express carriers in the region, which increases the chances of the deal being approved. In fact, the European Commission said in its decision against UPS that FedEx did not represent a significant European competitor that could counteract a UPS-TNT tie up.
   The TNT takeover would essentially reduce the number of global express carriers to three, along with DHL. TNT was once an integrated logistics company like FedEx, UPS and DHL, but sold off its contract logistics business to investors behind what is now known as CEVA Logistics.