UPS seeks $2.1 billion from European regulators to ease pain of aborted TNT Express takeover

Ever since UPS Inc. abandoned its US$6.8 billion bid for European parcel delivery firm TNT Express in January 2013, it has felt the European Commission (EC), the European union's antitrust arm, left it in the dark in explaining why the EC denied the company's bid. Now UPS wants to be compensated more than US$2.1 billion for the lingering aggravation.

UPS sued the EC today in the European Court of Justice, the EU's highest court, to recover costs and for damages stemming from the aborted acquisition. For legal ammo, Atlanta-based UPS is relying on a lower court ruling last March annulling the EC's 2013 decision on grounds it changed the version of its econometric analysis-which was crucial to forming its decision—without notifying UPS and TNT Express and giving them a chance to respond. The companies would have been better positioned to respond to competitive concerns had they known the details of the analysis' final version, the court ruled. The court found that there was time for the EC to share its final analysis with the companies.

Belgium-based TNT Express was acquired in April 2015 by UPS' arch-rival, Memphis-based FedEx Corp., for US$4.8 billion.

Under EU rules, the lower court's decision opened the door for UPS to file a claim seeking monetary damages. The EC has appealed the ruling. The UPS claim has been put on hold until the Court of Justice acts on the EC's appeal. A decision is expected sometime during the third quarter, UPS said today. A source in Brussels close to the situation said it is unique for a company to sue the EC under these circumstances.

In a statement, UPS said the compensation "corresponds to what we believe, through objective assessments verified by expert third parties, to be the value of the opportunity wrongly prohibited by the European Commission." UPS declined further comment. EC officials were unavailable for comment at press time.

UPS bid for TNT in March 2012. However, as the proposed transaction wended its way through the EC's complex antitrust review process, industry observers sensed the deal would become difficult for UPS to consummate. UPS and TNT Express said they made three proposals to address a series of competitive concerns raised by the EC. The proposed remedies included the sale of assets and allowing competitors' access to UPS' and TNT Express' network capabilities in various countries, according to the companies.

UPS complained that the EC never gave the companies any guidance as to whether they were on the right path or on what needed correcting.

Less than three weeks after notifying UPS it was leaning toward rejecting the deal, leading UPS to pull the plug, the EC issued a statement saying that the integration would have reduced competition in 15 of the 27 EU member states and that the remedies proposed by the two companies failed to quell regulators' concerns about a lack of competitive options.