EU officially blocks abortive UPS-TNT takeover

(BRUSSELS) - The EU officially blocked on Wednesday an abortive five-billion-euro bid by US courier giant United Parcel Services (UPS) to take over TNT Express of the Netherlands.

Although the decision was announced after the horse had bolted, it was only the third formal rejection issued as against some 800 positive merger decisions in the last three years, European Union Competition Commissioner Joaquin Almunia told a news conference.

"The Commission found that the take-over would have restricted competition in 15 (EU) member states when it comes to the express delivery of small packages," said a statement.

UPS abandoned on January 14 its battle to convince Almunia's office to back the deal, which included offers to sell off TNT's subsidiaries in these 15 national markets.

That announcement saw TNT lose half its value in a day, with UPS agreeing to pay a cancellation fee to TNT of 200 million euros.

"We worked hard with UPS on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems we identified," Almunia said in the statement.

"The Commission had serious doubts as to the ability of the very few potential purchasers that expressed their interest to exercise a sufficient competitive constraint on the merged entity in (European) express delivery markets on the basis of the remedies offered," it added, in a marker for future consolidation in the market especially for air carriage.

The two previous rejections under Almunia were of a Greek airlines merger, and a proposed global stock exchange giant stretching from New York to Frankfurt.