DPSGY Deutsche Post AG (PK)

By Natalia Drozdiak 

BRUSSELS -- United Parcel Service Inc. is suing the European Union's antitrust watchdog for EUR1.74 billion ($2.15 billion) plus interest over the regulator's court-annulled decision to block its merger with Dutch parcel-delivery company TNT Express NV, according to court documents published Monday.

The European Commission formally blocked the planned $7 billion UPS-TNT deal in January 2013 over competition concerns but the move was overturned by an EU court last year on the basis of procedural missteps by the regulator. The commission is appealing that judgment.

UPS is now seeking compensation from the commission for the 2013 decision, which the company says prevented it from "materializing the benefits associated with that proposed transaction."

"We feel strongly that the proposed acquisition would have constituted a good deal for logistics customers," said Gregg Svingen, a spokesman for UPS. "The compensation being sought corresponds to what we believe, through objective assessments verified by expert third parties, to be the value of the opportunity wrongly prohibited by the European Commission."

The commission will defend itself in court, an EU spokesman said.

The legal action comes at a time when the EU's top courts are increasingly scrutinizing decisions by the bloc's antitrust regulator. The EU's top courts in the past have rarely annulled decisions by the commission, bloc's executive, prompting outcry among affected companies who say the checks and balances in the EU's system are too weak.

Only a handful of merger vetoes have been overturned in the past, despite legal challenges being routine. In the rare situations where a top court has overturned a decision to block a deal, companies have typically gone on to seek compensation from the commission. For instance, Schneider Electric SA in 2003 sought compensation of nearly EUR1.7 billion after its acquisition of French electric-equipment maker Legrand was blocked but later overturned.

For UPS, the landscape has changed since the commission's 2013 decision, and any renewed attempt at a merger with TNT looks unlikely.

After UPS called off its merger in mid-January 2013 amid the commission's objections, logistics rival FedEx Corp. stepped in to acquire TNT in May 2016 for EUR4.4 billion, expanding its reach in Europe.

The commission blocked the UPS-TNT deal on concerns the overnight-parcel-delivery market would effectively become a duopoly between a combined UPS-TNT business and DHL, a unit of Deutsche Post AG. The regulator also worried that other parcel-delivery companies, including FedEx, could be shut out of the market.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

February 26, 2018 07:57 ET (12:57 GMT)

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