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The European Union's antitrust chief on Wednesday rejected a $6.9 billion deal for UPS to acquire Dutch delivery company TNT Express and said he was surprised the U.S. group jettisoned the venture when there was still hope for a solution.
Antitrust Commissioner Joaquin Almunia said that European businesses "would have been directly harmed" by the takeover "because it would have drastically reduced choice between providers and probably led to price increases."
UPS had offered in March to buy TNT, Europe's second-largest delivery company, to better compete with Europe's largest, Deutsche Post's DHL. UPS said that it had proposed "tangible remedies" but Almunia said they were "simply not enough."
Sensing a likely rejection, UPS scrapped the acquisition on Jan. 14, hitting the stock price of the Dutch delivery company. The decision surprised Almunia, convinced there still was room to find a compromise.
"I have to confess that I was a little bit surprised because we still had time when they published this statement," Almunia told reporters.
"We have experience that the final elements of a possible solution, a positive alternative, are not found the first day of negotiations but as close as possible to the last day of negotiations," he said.
The Commission reviews major corporate mergers and acquisitions to ensure they do not hurt fair competition in the market. It has the power to block deals or to demand concessions, such as the sale of business parts, to safeguard market balance.
It only was the third merger that Almunia rejected out of some 800 cases since he became the EU's competition commissioner in 2010. Yet is showed the power of the EU's antitrust division in setting the conditions for multinationals to operate in the 27-nation bloc.
The TNT takeover would have been the largest acquisition in UPS's history.
"UPS believes that the combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting much needed growth in Europe in particular," the company said in a statement Wednesday.
Almunia, however, disagreed. The EU found that it would have restricted competition in 15 member states, where the market would have been reduced to just 3 or 2 companies.
The EU was still looking for further concessions from UPS to make the deal palatable when the Atlanta, Ga. company scrapped it.
"We worked hard with UPS on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems," Almunia said.
UPS had offered in March to buy TNT, Europe's second-largest delivery company, to better compete with Europe's largest, Deutsche Post's DHL.
Despite the setback, Almunia was convinced TNT Express would remain a viable company.
"I don't think TNT is an ailing firm, not at all," Almunia said. "They are present in the market. I am sure they will continue to be in the market."