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TNT’s acquisition by FedEx is approved without restrictions

Merger

After analyzing the appeal presented by competitor UPS against the General Superintendence’s decision, CADE’s Tribunal upholds the approval of the transaction
published: Apr 04, 2016 11:30 AM last modified: May 12, 2016 12:40 PM

In the judgment session of 30 March 2016, the Tribunal of the Administrative Council for Economic Defense – CADE upheld General Superintendence’s decision for the unconditional approval of the merger related to the acquisition control of TNT by FedEx. (Merger File nº 08700.009559/2015 -12).

UPS do Brasil Remessas Expressas Ltda., qualified as third party, filed an appeal before CADE’s Tribunal against the decision of the General Superintendence, which authorized the operation in an opinion published in the Official Gazette in February. In its request, the rival company questioned the analysis made in the market of small packages express delivery for international destinations

According to the Reporting Commissioner, Cristiane Alkmin J. Schmidt, despite FedEx and TNT have a high joint participation in this market in Brazil, it is unlikely the exercise of market power by the companies because of the merger. Besides, according to the Commissioner, there are observable and measurable efficiencies that show that the net effect of the merger is, at least, non-negative.

Although the entry of new players as integrators (which have operational control over all the delivery logistics) is unlikely, other companies that operate in different links of the chain could offer this service promptly. It could be also noticed the territorial expansion of the integrators that operate in the market, if the price of the service increases after the merger. To the Reporting Commissioner, the rivalry exercised by the competitors, with worldwide presence, is effective, and it was supported by the majority of clients of all integrators (TNT/FedEx, DHL e UPS), who did not oppose the deal.

Schimidt also evaluated the grounds of the appeal filed by UPS and verified that the company “did presented neither new facts, studies nor new information  could support the allegations mentioned in the appeal. According to the Commissioner, she accepted the appeal in “good faith”, considering that there were possibility of the exercise of market power by the companies. However, she considered that CADE’s Tribunal has to be aware to accept appeals that really have opinions, proved facts, studies or any kind of document indispensable to the analysis of the alleged facts, as determined by the CADE’s Internal Statute.

This way, the Council accepted the appeal and dismissed it in the merits, upholding, therefore, the General Superintendence’s decision for the unconditional approval of the merger.

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