UPS Sues EU Regulator for $2.15 Billion Over Decision to Block TNT Deal -- 2nd Update
February 26 2018 - 10:31AM
Dow Jones News
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 veto of its merger
with Dutch parcel-delivery company TNT Express NV, a move that
could prove fruitful at a time when the bloc's top courts
increasingly scrutinize the powerful competition cop's
decisions.
In the past, the EU's two top courts have rarely annulled
decisions by the European Commission, the bloc's antitrust
regulator, prompting outcries among affected companies who say the
checks and balances in the EU's system are too weak. But recent
court decisions are increasingly putting the commission --which has
built a fearsome reputation over the past two decades through a
series of high-profile cases against America's biggest companies,
including General Electric Co., Microsoft Corp. and Google Inc.--on
the defensive.
In the UPS case, the European Commission formally blocked its
planned $7 billion acquisition of TNT 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," according
to court documents published Monday.
"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.
Following the UPS court judgment, the EU's highest court in
September backed Intel Corp.'s appeal of a EUR1.06 billion EU abuse
of dominance fine in 2009, referring the case back to a lower court
and dealing a blow to the European Commission.
The thorough audits by the two Luxembourg-based EU courts are
welcomed by companies and lawyers who have complained about the EU
antitrust watchdog's autonomy and its power to act as the
prosecutor, judge and jury in competition cases. While companies
can appeal decisions to the EU's top courts after they've been
taken, judges there look for obvious legal errors rather than
seeking to form a new opinion on cases and have rarely overturned
decisions made in Brussels. U.S. enforcers, by contrast, need to
prove their cases before a judge from the outset.
"There is a feeling among the companies and competition
practitioners that the courts have been rather lenient to the
commission and therefore, it's either better to settle or to forget
about appealing... Why go to the court at the end of the day if you
know the result?" said Assimakis Komninos, a Brussels-based partner
at global law firm White & Case." There have been a couple of
cases, which shows a bit [of] movement on the side of the court,
but look at where we are coming from."
Only a handful of merger vetoes have been overturned by the top
courts 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, in 2003 Schneider Electric SA
sought compensation of nearly EUR1.7 billion after its acquisition
of French electric-equipment maker Legrand was blocked but later
overturned. In the end, the commission was ordered to pay EUR50,000
in damages to Schneider.
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. meanwhile, has been grappling with problems at TNT. Last
summer, the unit was hit with a cyberattack that crippled
operations in the division for months and required hundreds of
millions of dollars in spending to fix.
The EU 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.
Paul Ziobro contributed to this article.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
February 26, 2018 10:16 ET (15:16 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Deutsche Post (PK) (USOTC:DPSGY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Deutsche Post (PK) (USOTC:DPSGY)
Historical Stock Chart
From Jul 2023 to Jul 2024