European Commission Opens Investigation Into Proposed Acquisition of TNT by FedEx
The European Commission has opened an in-depth investigation to assess whether the proposed acquisition of TNT Express by FedEx Corporation is in line with the EU Merger Regulation.
The commission has concerns that in a number of European markets for international express and regular small package deliveries, the merged entity would face insufficient competitive constraints from the only two remaining players, UPS and DHL. This could lead to higher prices for business customers and consumers.
The Commission now has 90 working days, until December 7, 2015, to investigate the proposed acquisition and to determine whether these initial concerns are founded. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
“Many businesses, and in particular e-commerce, rely heavily on affordable and reliable small package delivery services, and many consumers depend on these services to ensure rapid and safe delivery of goods they have bought,” said Commissioner Margrethe Vestager, in charge of competition policy. “The commission must therefore make sure that FedEx’s takeover of TNT would not impede effective competition and would not lead to higher prices for consumers.”
FedEx and TNT are two out of the only four integrators currently operating in Europe. Integrators are companies that control a comprehensive air and road delivery network throughout Europe and beyond and are capable of offering a broad portfolio of small package delivery services. The other integrators present in Europe are DHL, owned by Deutsche Post, and UPS, a US-based company.
The commission’s initial investigation has shown that small package delivery services can be divided into several segments, depending notably on whether the destination is in the European Economic Area or beyond and on whether the timing of the delivery is express or deferred.
The commission’s preliminary investigation indicated that the other integrators would be the only significant competitive constraint on the merged entity for most international express services, with a destination within or outside the EEA. As the proposed transaction would reduce the number of integrators competing in the EEA from four to three, the competitive constraint on the merged entity would be significantly reduced, leading to a concentrated market in several Member States for international express delivery services to a destination within or outside the EEA.
FedEx and TNT also provide international deferred services outside the EEA. The commission’s initial market investigation showed that the merged entity would have very high market shares for services to some destinations leading to potential competition concerns.
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