UPS to Take Legal Action on TNT Acquisition

It was back in 2013 that United Parcel Service (UPS) made a bid to take over TNT Express. After much discussion and the closure of the deal, it fell through because the European Commission stated that a TNT takeover would give UPS an unfair advantage in the European market.

UPS demands high financial compensation from the EU Commission for having vetoed the U.S. integrator’s intended TNT acquisition  -  photo: hs
UPS demands high financial compensation from the EU Commission for having vetoed the U.S. integrator’s intended TNT acquisition - photo: hs

UPS looking for compensation from the EU
At the end of February, UPS stated that they were initiating legal procedures against the European Union for losses suffered as a result of the fall through of the deal with TNT Express.
The Atlanta, Georgia-based giant parcels operator is claiming that it was treated unfairly by the EU prohibiting the deal after both companies had signed. To make matters worse for UPS, their arch-rival, FedEx eventually won and acquired TNT Express for US$4.8 billion in May 2016. Two billion dollars less than UPS had been willing to pay
After that things quieted down and many had thought that UPS had accepted the decision and the fact that FedEx took the cake off their plate. Not an easy pill to swallow as UPS had concrete plans to expand further in Europe. TNT Express was at that time the world’s fourth largest parcel operator with an attractive network of mail and courier services.
Ironically, UPS thought that the deal with TNT Express was signed and sealed. In 2013 they had actually acquired TNT Express for the US$6.8 billion before the EU Commission then overturned it after FedEx also complained. It was no secret that TNT had been looking for someone to take over their “Express” division since way back in 2010.

UPS did not have chance to defend themselves
This time last year there was a court ruling that the European Commission did not give UPS a chance to go against the 2016 ruling and therefore denying the U.S. parcels company the chance to defend itself. A tricky situation, and one which will have EU and U.S. lawyers busy for some time to come.
UPS has confirmed that they are opening a new legal process to seek compensation from the EU Commission for what they term as “losses suffered as a result of the acquisition being unfairly prohibited by the European Commission.”
FedEx had a much smaller operation in Europe at that time and it seems that the EU’s decision was based on UPS becoming too big in Europe when TNT joined the family. UPS is of a different opinion. They are still convinced that the deal with TNT would have given their customers and consumers a far better service. No doubt, UPS is very big in Europe. It is estimated that almost 50% of their global turnover originates on the European continent.
It’s going to take a long time before the lawyers on both sides get their portfolios together and it can be expected that there will not be a quick judgment on the issue.
Wait and see.

John Mc Donagh

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