European Commission infringed UPS’ rights

European Commission infringed UPS’ rights

The European Court of Justice (ECJ) has ruled that the European Commission in Brussels infringed UPS’ rights when it stopped the US express parcel and logistics giant from buying Dutch firm TNT Express in 2013 for €2.2billion reports aircargonews.net.

A UPS spokesperson confirmed that UPS was proceeding with the process of suing the commission for €1.7 billion in compensation over the blocked TNT takeover.

It launched the compensation claim in February 2018 following an earlier ruling in its favour by the European General Court concerning the original Commission prohibition on the TNT deal.

The UPS spokesperson said: “UPS is pleased that the European Court of Justice has agreed that UPS was not given a fair hearing. The judgment in UPS’s favour makes a number of points preserving a competitive environment in Europe by clarifying the procedure and relevant criteria for merger approval.

“UPS has operated in Europe for over 40 consecutive years and continues its programme of investing into its integrated global network, in which Europe plays a key role.”

The ECJ ruled earlier this week that the Commission’s decision prohibiting the acquisition of TNT Express by UPS “must be annulled due to procedural irregularity” adding that the General Court was “right in finding that the Commission infringed UPS’s rights of the defence”.

The Commission prohibited the acquisition by UPS of TNT Express on the ground that in 15 member states the operation “would have led to a significant impediment to effective competition on the market for the international express delivery of small parcels within the European Economic Area (EEA)” said the ECJ.

The ECJ said that the “decisive factor” on which that prohibition was based is “an econometric analysis that led the Commission to conclude that there was a risk that prices would increase on the majority of the markets concerned”.

Added the ECJ: “The General Court found that the price concentration econometric model ultimately used by the Commission differed considerably from that disclosed to UPS during the administrative procedure, without the Commission giving UPS the opportunity to submit observations on the amendments made.”

In the new judgment, the ECJ points out that observance of the rights of the defence before the adoption of a decision relating to merger control requires the notifying parties to “be put in a position in which they can make known effectively their views on the accuracy and relevance of all the factors on which the Commission intends to base its decision”.

It added: “Thus, where the Commission intends to base its decision on econometric models, the notifying parties must be able to submit their observations in that regard.

“Econometric models are, by their nature and purpose, quantitative tools appropriate for the purpose of carrying out the prospective analysis that the Commission undertakes in merger control proceedings.”

 

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