ECJ blocks UPS’ claim for TNT deal damages
22 / 12 / 2023
Europe’s top court has rejected UPS’ claims for damages of more than €1.7bn related to its failed takeover of TNT in 2013.
The European Court of Justice this week rejected UPS’ claim against the European Commission (EC) for compensation for the “economic losses allegedly suffered due to the unlawfulness” of the decision to reject the takeover deal back in 2013.
The European General Court made a corresponding judgment in the first instance in February 2022 and UPS had then appealed to the Court of Justice, with the final decision announced yesterday.
UPS has wanted compensation for its participation in a legal dispute over rival FedEx’s eventual takeover of TNT, the loss of profits due to its own failed takeover, and the payment to TNT of a contractual termination fee following the cancellation.
The claims were based on a 2017 ruling that a price concentration econometric model used by the Commission differed considerably from that disclosed to UPS.
However, the Court of Justice yesterday said that this irregularity was not the determining cause of UPS’ alleged loss of profit.
“The irregularity committed by the Commission is not the determining cause of UPS’ alleged loss of profit and therefore cannot justify a compensation payment,” the Court of Justice said.
It added: “By deciding not to go ahead with acquiring TNT as soon as the decision at issue was announced, UPS broke the causal link between the Commission’s infringement and the alleged damage.”
The case goes back to UPS’ attempted €2.2bn takeover of TNT in 2012. The move was blocked by the European Commission in 2013 on the grounds that it would have restricted competition.
However, in March 2017, after UPS lodged an appeal, the decision was annulled by the European General Court on the grounds of a “procedural irregularity” by the European regulator.
Europe’s second highest court said that the commission had “infringed UPS” rights of defence by relying on an econometric analysis which had not been discussed in its final form during the administrative procedure”.
This means the European Commission used an economic analysis that was not disclosed to UPS and it was therefore not able to respond to that analysis.
The Commission then appealed the decision, but this was rejected in 2019.
By this time, however, TNT had been acquired by Federal Express, the arch rival to UPS in the global express small package delivery services sector.
European Commission ‘infringed’ UPS’ rights by blocking TNT takeover
