UPS United Parcel Service

--The European Court of Justice has ruled in favor of UPS and against the European Commission on a decision to veto a deal on competition concerns

--UPS will now resume a EUR1.74 billion damages claim against the commission

--The wording of the ECJ's decision was critical of the commission

By Carlo Martuscelli

Europe's highest court has confirmed that a ruling overturning the European Commission's decision to block the acquisition of TNT Express by United Parcel Service Inc. (UPS) was correct, reviving a damages claim the U.S. carrier service made against the European body.

The commission blocked the $7 billion deal in 2013 over concerns that the merger would have a negative effect on competition--a conclusion it came to using an economic forecast to calculate the probable effect of the merger on pricing.

In the most recent ruling, the European Court of Justice said the objections UPS made about the commission's economic forecast model were well founded. This follows a similar judgment in 2017 from a lower court--the general court of the EU--that ruled that the commission had made procedural missteps.

UPS cancelled the TNT merger in 2013 due to the opposition from the commission. Rival FedEx Corp. (FDX) then stepped in to buy the Dutch company in May 2016 for 4.4 billion euros ($5.03 billion).

In February 2018, UPS went on the offensive, suing the European body for EUR1.74 billion over the veto. Legal experts close to the matter said the case was put on hold pending this latest ECJ decision, but this favorable ruling will allow the damages claim to resume.

Assimakis Komninos, a Brussels-based partner at global law firm White & Case, said the ECJ was critical of the commission in its judgment. "It's very hard on the commission, I think deservedly because there are some serious issues," he said. He said the court had raised concerns over impartiality and fairness. However, it is difficult to know to what extent this will reinforce the American package delivery service's damages claim.

"This harshness of language may be helpful. I have to say, however, that the case law is very restrictive. It's really hard to get damages," Mr. Komninos said.

A spokesman for UPS said that while he couldn't comment on specifics relating to the claim, the company was pleased that the ECJ has agreed that UPS wasn't given a fair hearing.

"The judgment in UPS's favor makes a number of points preserving a competitive environment in Europe by clarifying the procedure and relevant criteria for merger approval," he said.

Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com

(END) Dow Jones Newswires

January 16, 2019 10:56 ET (15:56 GMT)

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