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European court overturns 2013 decision to prevent UPS-TNT merger

THE decision made by the European Commission in 2013 to refuse to grant authorisation of the proposed merger between UPS and TNT has been annulled by Europe's General Court on the grounds of a "procedural irregularity" by the European regulator.

Following the ruling four years ago, Federal Express acquired TNT.

Europe's second highest court said that the commission in Brussels had "infringed UPS' rights of defence by relying on an econometric analysis which had not been discussed in its final form during the administrative procedure", reported London's Air Cargo News.

A UPS spokesman said: "UPS is pleased to see that its reasoning was upheld by the European General Court. While the decision in UPS's favour makes a number of points, the most significant of this decision is its impact in helping to preserve a competitive environment in Europe by clarifying the procedure and relevant criteria for merger approval.

In 2012, UPS notified the European Commission of its proposed acquisition of TNT for EUR5.2 billion (US$5.476 billion) under the Merger Regulation. In January 2013, the commission prohibited the proposed acquisition of TNT by UPS.

In essence, said the court in its judgment today, "it considered that that take-over would have restricted competition in 15 member states as regards the express delivery of small packages to other European countries".

The court's statement continued: "In those member states, the acquisition would have reduced the number of significant players in that market to only three, or even two, sometimes leaving DHL as the only alternative to UPS.

"The merger would therefore, according to the Commission, have likely harmed customers by causing price increases. UPS brought an action before the General Court seeking the annulment of the Commission's decision."

The General Court has now upheld the action and annulled the commission's decision.