United Parcel Service Inc. is suing the European Union for $2.1 billion in compensation for damage it claims to have suffered when regulators wrongly vetoed its attempted takeover of parcel delivery rival TNT Express NV.
UPS is asking the EU’s General Court to award it compensation plus interest and taxes it would pay on any windfall payment, according to details of the case published in an EU Court filing on Feb. 26.
The same court threw out a 2013 veto because merger watchdogs had failed to inform the Atlanta-based logistics giant when they changed an economic model used to weigh the evidence.
The company, which filed its lawsuit in December, wants to "be put in the position it would have been in had the unlawful decision not been adopted," it said in the filing. Blocking the deal prevented UPS "from materializing the benefits associated with that proposed transaction."
The EU has become one of the toughest regulatory hurdles for big takeovers, squeezing hefty concessions from global companies to allay concerns over how a deal might hurt competition in Europe.
Firms are increasingly calling on the EU courts to check the commission’s powers, fighting its decisions to open probes, what it focuses on in a merger review and how it agrees on concessions with companies.
"The compensation being sought corresponds to what we believe, through objective assessments verified by expert third parties, to be the value of the opportunity wrongly prohibited by the European Commission," UPS said.
The commission said it would defend itself in court. It is appealing the court ruling that overruled its decision to block the deal.
The UPS controversy is one of a series of cases where the EU’s merger control arm is under pressure. HeidelbergCement AG lost a court challenge over the EU as the right regulator to review a takeover of a Cemex unit. It’s separately asked the court to overturn the EU veto of the deal last year. Royal KPN NV successfully battled an approval of a rival’s Dutch cable-TV acquisition, with officials criticized for failing to state reasons on why competition would be harmed. That now forces the EU to reassess the Liberty Global Plc- Ziggo NV tie-up.
Despite the claim for compensation, the separate legal battle over the review of the UPS-TNT deal is rumbling on. EU regulators have taken their fight against the court ruling to the EU’s highest tribunal, protesting that the judgment gives them less leeway in the crucial last weeks before a deadline to decide whether deals are approved or fall by the wayside.
By Aoife White