The European Commission has approved the proposed acquisition of TNT by the FedEx Corporation, as it will not give rise to competition concerns. Following an in-depth investigation in July 2015, the EC also finds that the merged entity will continue to face sufficient competition from its rivals in all markets concerned.

Commissioner Margrethe Vestager, in charge of competition policy, commented: "Many businesses and consumers rely heavily on affordable and reliable small package delivery services, in particular
with the growth of e-commerce. Therefore, the Commission has thoroughly assessed the markets affected by this takeover. The conclusion is that European consumers will not be adversely perturbed
by the transaction. We have therefore unconditionally approved the merger.”
Both intra and extra-EEA
The investigation was prompted by concerns that the proposed acquisition would substantially lessen competition in certain markets for international deliveries of small packages up to 31.5kg in
the European Economic Area (EEA, the 28 EU member states plus Iceland, Norway and Liechtenstein).
The Commission’s concerns were that the merged entity would face insufficient competitive constraints from the only two remaining integrators, DHL Express and UPS. A lack of sufficient
competitive constraints could lead to higher prices for business customers and consumers. These concerns have been dispelled by the Commission's in-depth investigation. The Commission concluded
that the proposed concentration would not significantly impede effective competition in the EEA or any substantial part of it.
The investigation focused on both intra and extra-EEA delivery. As regards international intra-EEA express delivery services, the Commission considers in particular that the merged entity's
market position will be moderate and that, amongst integrators, FedEx and TNT are not particularly close competitors. The Commission's investigation showed that FedEx still exerts a weaker
competitive constraint on the other integrators due to the lack of density and scale of its European networks.
Price concentration analysis
The Commission has also carried out a price concentration analysis, which is in line with the approach it adopted when the merger UPS/TNT was proposed. In this respect, the Commission also found
that the transaction will give rise to verifiable, merger-specific efficiencies due to network cost savings which will benefit customers.
As regards extra-EEA deliveries, the Commission concluded that the market position of the merged entity on markets for deliveries to the world and to the major world trade lanes will be moderate.
The investigation has revealed that due to TNT's focus on intra-European markets, FedEx and TNT are not particularly close competitors amongst integrators.
The Commission also found that DHL and UPS will compete effectively with the merged entity after the transaction and that the takeover will allow the business to be run more efficiently due to
network cost savings.
No impact on SME business
Another major concern demanding closer investigation was the impact of the proposed merger on the business of small and medium enterprises (SMEs). After a comprehensive market investigation, the
Commission concluded that SMEs will not be more affected by the acquisition than other customers.

It should be remembered that, in 2013, the Commission prohibited the planned acquisition of TNT by UPS. At that time, the EU watchdogs found that the takeover was likely to harm customers by
causing price increases. This conclusion was amongst other things based on the fact that FedEx did not exert a significant competitive constraint in a number of national markets for intra-EEA
express delivery services.
FedEx and TNT welcome EC decision
In a joint statement FedEx and TNT have expressed their satisfaction about the official go-ahead. “We are extremely pleased to receive the European Commission’s unconditional approval,” said
David Binks, Regional President Europe, FedEx Express. “We believe the combination of TNT Express and FedEx will provide significant value to the employees, customers and shareholders of both
companies.”
Binks, who will take the helm of the merged FedEx/TNT operation as CEO, also said that FedEx and TNT Express continue to work constructively with the regulatory authorities to obtain clearance of
the transaction in the remaining jurisdictions, including Brazil and China. FedEx and TNT Express are making timely progress and continue to anticipate that the offer will close in the first half
of 2016.
Liege Airport awaits further developments
A question still unanswered is the future of the present air hub of TNT at Liege Airport. One of the consequences of the merger will be the sale of TNT Airways, as it will no longer be considered
as a European airline company. LGG’s Head of Communication Christian Delcourt told CargoForwarder Global that the decision of the EC comes in no way as a surprise.
“The merger will have no impact whatsoever on our operation in 2016,” Christian says. “It remains to be seen what will become of TNT Airways. Who will buy it? What will be the buyer’s
intention? Both as regards the airlines as the further development of FedEx, we are facing attractive developments for Liege Airport to discuss, forcing us to play our trump cards in order
to convince that we are the place to be for air cargo.”
Marcel Schoeters in Brussels
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