Wednesday, October 21, 2015

Express Freight and Parcel Carriers Expect Positive Result Over Merger

Logistics Groups Predict European Commission Victory
Shipping News Feature
EUROPE – It is claimed by the two companies involved that EU antitrust regulators will apparently follow in the footsteps of their New Zealand counterparts and not issue any objections to the planned €4.4 billion acquisition of the Dutch parcel carrier TNT Express, by its US rival, express freight carrier the FedEx Corporation. No official confirmation has been provided by the European Commission on its final decision but a joint statement from the two small package carriers said:

“To date [FedEx and TNT] have not received a Statement of Objections from the European Commission. The internal deadline of the European Commission for issuing a Statement of Objections would have expired on 23 October 2015, but FedEx and TNT have been informed by the European Commission that no Statement of Objections will be issued.”

If confirmed, the merger should close in the first half of 2016. The Commission opened an investigation in July over concerns that the merged entity would face ‘insufficient competitive constraints’ from the only two remaining players - UPS and DHL.

This early announcement is somewhat surprising given both the way a deal between UPS and TNT was scuppered in January 2013 and the statement in July this year by European Commissioner Margrethe Vestager that FedEx and TNT are two out of the only four so-called 'integrators'* currently operating in Europe and ‘the Commission must therefore make sure that FedEx's takeover of TNT would not impede effective competition and would not lead to higher prices for consumers.’

As nothing in the market appears to have radically changed since the time that deal was proposed it was widely expected that the same reasons that torpedoed the UPS/TNT deal would also sink this latest venture.

*’Integrators’ are companies that control a comprehensive air and road delivery network throughout Europe and beyond and are capable of offering a broad portfolio of small package delivery services. The other 'integrators' present in Europe are DHL, owned by German based Deutsche Post, and US headquartered outfit UPS.