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UPS Always Rings Twice

0227_UPS

Image source: chrisdorney / Shutterstock.com

What's going on?

American delivery company UPS announced on Monday that it’s suing the European Union for $2.1 billion for blocking its plans to merge with European rival TNT five years ago (tweet this).

What does this mean?

UPS wanted to merge with TNT for $7bn back in 2013, but the EU’s competition regulator nixed the deal, saying it would create an over-concentrated market for delivery in Europe (meaning that companies could overcharge consumers for their services, as there would be less competition). UPS then withdrew its bid, and eventually FedEx (which has a smaller presence in Europe) ended up acquiring TNT for $4.8bn in 2016.



But UPS challenged the original decision in the EU’s highest courts, which eventually ruled last year that the regulator’s reasoning in blocking the deal was shaky. Now, UPS is suing the EU for compensation, saying that it should be reimbursed for the financial benefits the company would have realized from a merger with TNT.

Why should I care?

For you personally: Competition watchdogs have your back (in theory).

“Antitrust” regulators rose to prominence about 150 years ago in response to the potentially harmful power big monopolies wielded over their customers (e.g people like you!). These competition regulators routinely examine proposed mergers and acquisitions to ensure that the resulting entity won’t be so large as to harm the principle of fair competition.



The bigger picture: The EU’s antitrust arm has been getting pretty active lately – and this lawsuit is unlikely to stop it.

The EU’s competition regulator has stirred some controversy for actively hounding large companies like Google and Amazon, especially when it comes to things like data protection and whether certain countries have created an unfair playing field via tax incentives. As EU courts seem more willing of late to go against the regulator, it’s possible that some of these rulings could end up being reversed – although that doesn’t really help the companies today.

Originally posted as part of the Finimize daily email.

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