The European Commission has opened an in-depth investigation into
FedEx’s proposed $4.8bn takeover of TNT Express over concerns the deal
could reduce competition and push up prices.
The Commission said it had concerns that on 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, it said.
Both TNT and FedEx described the probe as a phase 2 review and said
it was a customeray part of the Commission’s investigation process.
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.”
A preliminary investigation conducted by the Commission indicated
that DHL and UPS would be the only significant competitive constraint on
the merged entity for most international express services, with a
destination within or outside the European Economic Area (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.
The Commission's initial investigation also showed that the merged
entity would have very high market shares for services to some
destinations leading to potential competition concerns.
The Commission now has 90 working days, until 8 December 2015, to
investigate the proposed acquisition and to determine whether initial
concerns are founded.
FedEx said the transaction is also being reviewed by other antitrust
agencies, including the Ministry of Commerce (MOFCOM) in China and
Conselho Administrativo de Defesa Econômica (CADE) in Brazil.
FedEx Express Europe president David Binks said: “We will continue to
work together with TNT Express to meet the European Commission’s need
for additional due diligence and are confident that the combination of
both companies will increase competition and create benefits for
customers.
“We continue to make progress on all of the necessary regulatory
steps around the world that would allow us to complete this transaction
in the first half of 2016 and unite two great teams that share a passion
for customer service.”
TNT said it looked forward to the success of the intended acquisition.
“The company will continue to cooperate with FedEx and the European
Commission with a view to a positive outcome,” it added. “During the
transaction approval process, TNT remains focused on executing its
Outlook transformation and turnaround strategy.”
FedEx had sought to assuage competition concerns by promising to sell
the TNT air fleet of 54 freighter aircraft would be sold to a third
party.
On announcing its half-year results, TNT said it expected the deal to be completed in the first half of next year.
The takeover of TNT is based on an all-cash offer by FedEx for all
issued and outstanding ordinary shares, including shares represented by
American Depositary Receipts of TNT Express for a cash offer price of
€8.00 per share.
FedEx started the formal process to obtain merger control approval
from the Commission by submitting the required filing to obtain
regulatory clearance on June 26.
Source : http://www.aircargonews.net/news/airlines/express/single-view/news/brussels-launches-probe-into-fedexs-proposed-tnt-takeover.html