TNT and UPS have told the European Commission that the two companies will sell business assets and grant air access to outside companies in order to address the organization's objections to a proposed merger and ensure a deal goes through by early 2013.
Details of the concessions are not being released, but they concern competitive effects the merger would have on the international express small-package market in Europe.
"Eligible buyers of these activities will have to ensure the long-term
viability of the divested activities and continuity of customer service," TNT and UPS said in a joint press release.
The commission will now market-test these remedies, and as a consequence, the review period for the merger has been extended to Feb. 5, 2013. The $6.3 billion merger, announced in March, was originally estimated to go through during the fourth quarter of this year.
This latest development in the merger talks comes out of the commission's Statement of Objections, which was released in October and detailed the EU's concerns about the merger. One of the main issues has been lack of competition in the European logistics sector. At the time, UPS released a statement that said, in part, that "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."
Both TNT and UPS are pushing hard for the merger to happen. Earlier this month, TNT Express officials announced the conditional sale of TNT Airways and Pan Air to ASL Aviation Group. The sale will go through once the EU approves the merger deal.
A source familiar with the commission's objections told American Shipper
that logistics companies in Europe are concerned about the merger and have expressed this concern to the commission, but that they are not necessarily opposed to the deal. These industry groups cited the price developments that occurred in the U.S. market after DHL exited as reasons to be concerned about fewer logistics options. These companies think something similar would happen in Europe and want to make sure competition in Europe stays “sufficient.” - Jon Ross