One of the largest shipping companies in the world might be getting even bigger, unless European Union regulators say otherwise.
FedEx serves 220 nations around the globe and delivers an estimated nine million packages every day. Now, the company wants to extend its reach even further. FedEx recently bid $4.9 billion (4.4 billion euro) for TNT, a Dutch shipping rival. But this summer, the European Commission launched an antitrust probe over fears that the deal would ultimately lead to less competition and higher prices in EU member countries.
If FedEx did acquire TNT, the newly merged company would have only two major competitors, UPS and DHL. The EU antitrust commission will make a decision by January 13, 2016, now that FedEx has asked for a 20-day extension. For their part, FedEx Express in Europe, Middle East, Indian Subcontinent and Africa (EMEA) representatives say the company is fully confident the European merger will be approved come January.
“We’re not working on remedy plans,” said FedEx Express EMEA President David Binks. “We’re not anticipating that situation. We’re anticipating the deal will be approved.”
However, company executives said the same thing in July over the likelihood of antitrust investigations being opened in the first place. The European small-package delivery market only includes a handful of players, but so far TNT has failed to pursue the growing demand for e-commerce-related deliveries. If the FedEx-TNT merger does proceed, FedEx hopes to start targeting the e-commerce sector.
DHL Express currently dominates the European market, followed by UPS and Amazon.com, which also has a delivery service in European countries. If the merger is successful, FedEx would gain a 22% share in the market. But if EU regulators keep the deal from moving forward, TNT executives say their company would struggle to remain competitive.
Although FedEx insists the deal will go forward as planned once regulators perform their due diligence, it’s not the first time the commission has prevented a TNT merger. In 2013, the EU’s antitrust commission blocked a proposed TNT-UPS merger over fears of reduced competition.