The European Commission has launched an in-depth investigation into the proposed acquisition of TNT Express by FedEx.
The Commission is concerned 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 large integrators – UPS and DHL.
It argues 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 European Economic Area.
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.
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.”
FedEx said it was confident that that the combination of the two companies would increase competition and create benefits for customers.
David Binks, president of FedEx Express – Europe, said: “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.”
FedEx has also submitted a request for review and approval of its Offer Document with the Netherlands Authority for the Financial Markets. Based on the required steps and subject to the necessary approvals, closing of the offer is anticipated in the first half of 2016.
A TNT statement said the company 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. Once approved, the joining of FedEx and TNT will create benefits for all stakeholders. It is intended to provide customers access to a considerably enhanced, integrated global network, combining TNT’s strong European capabilities and FedEx’s strength in other regions globally, including North America and Asia. TNT’s customers would also benefit from access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities.”
The transaction is also being reviewed by other antitrust agencies, including the Ministry of Commerce in China and Conselho Administrativo de Defesa Econômica in Brazil.