The European Commission (EC) says it is concerned that the proposed takeover of Dutch logistics firm TNT Express by FedEx Express (FX, Memphis International) could negatively impact competition in the bloc's market.
Announcing an in-depth investigation to assess whether the proposed takeover is in line with EU Merger Regulations, the EC said its concerns focus on a number of European markets where the merged entity would face insufficient competitive constraints from the only two remaining players (UPS and DHL).
"Many businesses, and in particular e-commerce, rely heavily on affordable and reliable small package delivery services, and many consumers depend on these services to ensure rapid and safe delivery of goods they have bought," Commissioner Margrethe Vestager, in charge of competition policy, said. "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.”
The investigation is slated to last until early December following which the EC will publish its report and findings.
Similar concerns thwarted UPS Airlines (5X, Louisville International) parent United Parcel Service's plans to acquire TNT in 2013. Back then, the EC vetoed the EUR5.16 billion (USD7.1 billion at the time) deal after UPS failed to find a buyer for TNT's subsidiaries in fifteen EU countries needed to ensure viable competition in those markets.
FedEx announced it would acquire 100% of TNT Express N.V. shares for EUR4.4 billion (USD4.8 billion) in cash in April this year. Should the merger go ahead, the new entity would retain TNT's Liege logistics hub while establishing its European regional headquarters at Amsterdam/Hoofddorp.
However, in order to satisfy European carrier ownership regulations, the merged company will divest itself of TNT Airways (Liège) with the airline's intercontinental air operations transitioning to FedEx where regulation permits.
