UPS sues EU for blocking EUR5bn TNT Express deal

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United Parcel Service has sued the European Commission for compensation over its 2013 decision to block its €5bn takeover of TNT Express, its Dutch rival, on anti-trust grounds.

The US delivery company has filed a case with the European general court to recover €1.7bn as well as interest and tax in “compensation for the losses suffered as a result of the acquisition being unfairly prohibited”, according to court documents and a UPS spokesperson. The case was filed in December but was revealed when documents concerning the case were published on Monday.

It follows a decision in March 2017 by the general court, which overturned the EU competition commission’s January 2013 decision to block UPS’s takeover of TNY.

It was the first time in more than a decade that the court found that the EU regulator had wrongly blocked a transaction.

The EU’s competition commission, headed since 2014 by Margrethe Vestager, has played an increasing part in shaping global mergers and acquisitions by setting out its views on how deals might affect the bloc’s consumers.

It vetoed the US logistics’ group plans to buy TNT citing concerns that the deal would drastically reduce choice and would probably increase prices for small-parcel delivery in the EU.

But the general court ruled in its decision last year that the commission “infringed UPS’ rights of defence” by basing its rejection of the UPS-TNT deal on an analysis that had changed from that discussed with the US logistics group during the process of considering its plans.

The Dutch company was subsequently bought by UPS’s arch-rival FedEx for €4bn in a deal unconditionally approved in January 2016.

UPS confirmed it had filed the case and said: “We feel strongly that the proposed acquisition (of TNT) would have constituted a good deal for logistics customers as well as B2C consumers. UPS continues to remain bullish on Europe.”

The commission said it would defend itself and noted that it had also appealed against the annulment of its decision to block the original UPS plan to acquire TNT.

A final resolution of the claims is likely to take years. The court may decide to consider each case in parallel or delay a decision on UPS’ damages claim until the commission’s appeal is concluded.

The last time EU courts overruled the regulator’s decision to block a deal was in 2002, when the judges annulled a trio of decisions in one year — proposed deals involving Airtours/First Choice, Schneider/Legrand and Tetra Laval/Sidel.