With the bombshell that FedEx has made a £3bn-plus move for TNT Express, The Hub started pondering the failure of the previous UPS bid for the express delivery company.
2012’s move by UPS for TNT Express appeared a done deal but became mired in politics when the European Commission became involved.
Ultimately UPS walked away after the EC indicated it would not sanction the merger on competition grounds.
Some time later the commission published its reasons for opposing the merger. These were:
- That the deal would have reduced competition in the international delivery sector in 15 countries, where Fed-Ex, DHL, UPS and TNT are the main players.
- Despite having two air hubs and a huge ground network across Europe, the EC said Fed-Ex would not have provided sufficient competition to the merged company.
- It claimed Fed-Ex had a weaker market share, “inferior” coverage compared to other integrators (parcel carriers that have their own end-to-end delivery network, including an air network), a network that was comparatively “less developed”, and higher European pick up and delivery costs than UPS and TNT.
- Post deal, customers in the affected countries would only be able to choose between UPS/TNT and DHL for international deliveries. It claimed that this would give both firms “an incentive to increase prices after the merger”.
So given the EC’s comments on Fed-Ex from before, will regulators welcome this deal this time as something that will – counterintuitively – actually strengthen competition within the express sector?