The European Commission has delivered a document to UPS and TNT Express detailing the reasons why it objects to their intended merger, the two companies announced Friday.
Combination of the two integrated parcel delivery companies would create a powerhouse in Europe rivaling DHL. EU regulators in recent weeks have hinted in recent weeks at restricting the transaction because of fear it would have a negative impact on the competitive balance for pan-European courier services. FedEx Express is the fourth global express carrier operating in the region, although it has a smaller footprint than its competitors.
UPS and TNT did not provide details about what was included in the confidential statement of objections. They said they will respond to the European Commission's letter within a couple of weeks.
Atlanta-based UPS made a $6.5 billion offer for TNT in March.
"UPS and TNT Express believe competition in Europe continues to be significant, coming from multiple players who offer similar services. The combined company will help create a more efficient logistics market, thereby improving the competitiveness of Europe and the solutions offered to businesses and consumers. Those benefits include future improvements to e-commerce to help achieve the EU objective of a Digital Single Market. In addition, customers and consumers will benefit from a broader portfolio of services and better global access, along with lower supply-chain costs overall and improved service levels in terms of timing and reliability," the companies said in a joint statement.
It is possible that TNT and UPS will have to make some concessions, such as hiving off some parts of the network, to satisfy EU regulators. The companies said they still hope to finalize the transaction early next year. - Eric Kulisch