Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC to investigate proposed acquisition of TNT Express by FedEx, (Jul 31, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has opened an in-depth investigation to assess whether the proposed acquisition of TNT Express by FedEx Corporation is in line with the European Union (EU) merger regulation, the Commission announced today. The EC was notified of the transaction on June 26, 2015.

FedEx is a U.S.-based international provider of small package delivery, freight forwarding and cargo transportation services through its integrated global network. TNT Express is based in the Netherlands and is active in the global logistics sector, where it provides small package delivery, air and ground freight and freight forwarding services.

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 package delivery companies (UPS and DHL). This could lead to higher prices for business customers and 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 (EEA) or beyond and on whether the timing of the delivery is express or 'deferred'.

The Commission's preliminary investigation indicates 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.

Commissioner Margrethe Vestager, in charge of competition policy, said, "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. 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."

The Commission now has until December 8, 2015, to investigate the proposed acquisition and to determine whether its initial concerns are founded or not.

Cement manufacturers. The EC also announced today that it has closed an antitrust investigation opened in December 2010 against a number of European manufacturers of cement. The Commission had indications suggesting possible import/export restrictions, market sharing, price coordination and information exchanges in the markets for cement and related products. Inspections were carried out in November 2008 and September 2009. The evidence obtained in the Commission's investigation was not sufficiently conclusive to confirm these initial concerns. The EC will continue to monitor closely developments in the European cement market.

Companies: TNT Express; FedEx Corporation

News: AcquisitionsMergers Antitrust