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Logistics & Fulfilment

FedEx, TNT deal no threat to competition, says ACCC

After consulting with online retailers, the competition watchdog has announced it will not oppose FedEx’s proposed acquisition of TNT Express.

The ACCC found that if the merged entity did increase prices, clients would likely switch to UPS or DHL.

The global deal for the two international delivery giants to merge also received approval from regulators in the US this week. European Union regulators are yet to sign off on the proposed transaction, but are reportedly set to OK FedEx’s 4.4 billion euro acquisition of the Dutch parcel carrier.

The ACCC said FedEx and TNT primarily overlap in the supply of express international delivery services of small packages (express services). Express services have time-definite or day-definite delivery guarantees, which are distinguishable from standard air mail services.

“The ACCC sought information and views from a range of interested parties including online retailers and suppliers of express services. Customers did not raise significant competition concerns with the ACCC,” ACCC chairman, Rod Sims, said.

“Based on market inquiries and information provided by the merger parties, the ACCC determined that the proposed acquisition is unlikely to result in increased prices or reduced service levels. The merged entity will continue to face significant competition, including from other international rivals with significant global delivery infrastructure and networks. The merged entity will also face a credible threat of new entry and expansion by rivals.

“Customers of express services face low costs to switch suppliers. If the merged entity attempted to increase prices, most customers indicated they could move to other suppliers, most notably DHL or UPS,” Sims said.

The deal is expected to close in the first half of 2016.

The ACCC said it consulted other international competition regulators in the course of its review, including the European Commission, whose review is ongoing, and the New Zealand Commerce Commission, which recently approved the proposed acquisition.

 

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