EU's Almunia cautious over UPS concessions for TNT deal

BRUSSELS Thu Dec 6, 2012 7:42am EST

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BRUSSELS (Reuters) - Europe's anti-trust watchdog said on Thursday that UPS (UPS.N) faced a difficult task to overcome competition issues related to its plan to buy Dutch rival TNT Express (TNTE.AS).

European Union Competition Commissioner Joaquin Almunia expressed doubts whether UPS, the world's No.1 package delivery company, could allay concerns that the deal would reduce the number of competitors in Europe to two.

"It still remains to be seen whether appropriate solutions will ultimately address our concerns for express-parcel deliveries in Europe," he said.

Almunia said in a conference speech concessions proposed by UPS must ensure that a third company could compete with a combined UPS and TNT and Deutsche Post's (DPWGn.DE) DHL unit.

UPS's proposed 5.2 billion euro takeover of TNT Express would make the U.S. group the market leader in Europe and also give UPS access to TNT's networks in Asia and Latin America.

UPS and TNT have said they plan to sell off certain assets to help resolve the competition concerns [ID:nL5E8MU0PK].

The U.S. firm has offered to sell warehouses and customer bases in more than 10 countries, mainly in eastern Europe, a person familiar with the matter said. The company is also willing to provide rivals access to its planes at fixed fees.

The source said UPS was talking to prospective buyers, among them French mail group DPD and Royal Mail's GBPO.UL European express parcel service GLS.

UPS, which also competes with U.S.-based FedEx (FDX.N), declined to comment.

Almunia also told the conference that the "remedies" had been improved. He said the European Commission was seeking feedback from competitors in the industry and customers on the concessions and would then discuss them with UPS.

The Commission is scheduled to decide on the deal by February 5.

(Reporting by Foo Yun Chee. Editing by Jane Merriman)

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