M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, January 30, 2013

EU officially blocks TNT acquisition

Today, the EU officially blocked the acquisition of TNT by UPS.  Here's the press conference announcing the commission's decision:

UPS and the EU tried - unsuccessfully - to work through the issues:

To address the Commission's concerns, UPS proposed to divest TNT's subsidiaries in the 15 relevant Member States, plus – under certain conditions - TNT's subsidiaries in Spain and Portugal, to further increase the volume of small package express deliveries that would be transferred to the purchaser. UPS also offered access to its air network for 5 years, should the purchaser not be a so-called "integrator".

However, to provide intra-EEA express deliveries from the 17 countries covered by the remedy package, the purchaser would have needed suitable networks or partners in these other countries. This requirement alone severely limited the number of potentially suitable purchasers, casting doubt over the effectiveness of the remedies. To dispel this uncertainty, UPS would have needed to sign a binding agreement with a suitable purchaser before the concentration was implemented. However, UPS did not propose this to the Commission and its last minute attempt to sign such an agreement before the end of the Commission's investigation did not materialise.

Moreover, the Commission had serious doubts as to the ability of the very few potential purchasers that expressed their interest to exercise a sufficient competitive constraint on the merged entity in intra-EEA express delivery markets on the basis of the remedies offered. In particular, a buyer that is not already an integrator would need the ability and incentive to invest in its own air transport solution and to upgrade its ground network in order to become a sufficient competitive threat on the merged entity. Without sufficient volume in express deliveries it is doubtful that such an incentive would exist.

Without EU sign off, UPS had to walk away from the transaction.  UPS will now pay TNT a 200 million euro reverse termination fee due to the fact that the transaction was terminated because of a failure of the antitrust condition. 

-bjmq

 

 

 

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