Newspaper article International Herald Tribune

Europe Officially Bars U.P.S. Merger with TNT

Newspaper article International Herald Tribune

Europe Officially Bars U.P.S. Merger with TNT

Article excerpt

Regulators said Wednesday that the combination of the two shipping companies would have resulted in a major reduction of choice for European customers.

The European Commission continued to flex its antitrust muscles on Wednesday, officially blocking United Parcel Service's $6.9 billion bid to buy the Dutch shipping company TNT Express.

The decision was widely telegraphed after U.P.S. withdrew its offer this month, citing regulators' resistance to the deal.

On Wednesday, the regulators offered more insight into their reasoning, saying the combination of the two shipping companies would have significantly reduced shipping options for European customers.

Businesses based in Europe "would have been directly harmed by the takeover of TNT by U.P.S. because it would have drastically reduced choice between providers and probably led to price increases," the E.U. competition commissioner, Joaquin Almunia, said during a news conference. "We worked hard with U.P.S. on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems we identified."

The deal is the third Mr. Almunia has blocked since he took over the role of the bloc's antitrust chief in February 2010.

He stopped the merger of Aegean Airlines and Olympic Air, the two largest airlines in Greece, in January 2011. A year later, he blocked the proposed $9 billion merger of Deutsche Borse of Germany and NYSE Euronext, ending their plans to create the largest equity and derivatives exchange.

On Wednesday, Mr. Almunia noted that his group had approved about 800 deals in the same period.

European authorities can seem tougher than their American counterparts on mergers partly because U.S. agencies tend to take a somewhat more flexible approach in critical areas, some experts say.

Revised guidelines adopted by American authorities in 2010 meant that "the exact boundaries of the market are not so relevant for the assessment as it was before," said Mario Mariniello, an economist at Bruegel, a research organization in Brussels. "Cost savings and other benefits to consumers spread across different markets may have more weight in the final assessment" by the U.S. authorities, he said.

But Dave Anderson, an antitrust partner in the Brussels office of Berwin Leighton Paisner, said any perception that Mr. Almunia was particularly tough on mergers was premature.

"While it may appear that there has been a spike in merger enforcement because this is the commission's second prohibition in less than a year, Mr. Almunia's merger record is not out of line with previous commissioners," he said.

Mr. Anderson said that Karel Van Miert, a former competition commissioner, blocked nine mergers during the 1990s, and that Mario Monti, another former commissioner, blocked eight deals in the years after 2000. …

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