EU blamed for failure of UPS-TNT deal that now leaves giant DHL on top

THE European Commission's (EC) attempts to enhance competition by fracturing networks only underlined its lack of knowledge of the express parcel market which survives on interdependence, says the UK's Transport Intelligence in its post mortem on the proposed UPS-TNT merger which EU regulators blocked.

This reaction came after Atlanta's United Parcel Service (UPS) announced it had exited its US$5.16 billion bid to acquire TNT, Europe's second largest parcel delivery company, following a drawn-out opposition by the European Commission (EC) over competition fears.

According to Ti head of consultancy Joel Ray, the regulatory body seemed unable to manage the process due to lack of understanding and being driven purely by political motivations rather than the gain for European shippers of a robust new road and air-based player.

"This decision has set the market back many years, and risks reducing competition, not increasing it," said Mr Ray.

The deal will leave the European express market consisting of a series of smaller players with only one big operator, Bonn-based DHL.

Should FedEx be offered a bite at TNT Express, it is expected to suffer the same delays regardless of a reduced price since the failure of the UPS bid. TNT Express has suffered from a drawn-out process in share sale price slump and presented itself as a less attractive acquisition than before UPS signalled interest.

The substantial concessions were essential to prevent price collusion or anti-competitive problems, according to the European Commissioner for Competition Policy Joaquin Alumnia.