UPS Attempts to Purchase European Market Share

UPS is in the process of attempting to purchase TNT Express in order to increase market share and presence in Europe. TNT Express is a Dutch express shipping company that specializes in European parcel delivery but also has small operations in the Asia and South America.  UPS’ efforts are being stalled by the European Union, who believes there might be an issue of competition reduction, if the two logistics giants merge.

Europe currently has four major companies that are identified as parcel delivery firms: TNT Express, DHL Express, UPS, and FedEx with market shares of 18%, 16%, 14%, and 4%, respectively.  The parcel delivery service in Europe seems to fall under the category of an oligopoly according to Chapter 4: Costing and Pricing for Transportation. The industry is made up of a few large sellers of a similar service who must all keep in mind the pricing decisions of their competitors.

The European Union fears that UPS’ purchase of TNT Express would result in UPS and DHL being the only two major competitors in many European market regions.  With only two main competitors, DHL and UPS could take customers captive with raised prices and few other substitute options.  UPS counters the European Union’s claims by stating that the combination of the two companies resources and networks would result in a “more efficient logistics market,” ultimately benefiting customers.

http://www.ft.com/cms/s/0/a2f360e0-2506-11e2-8924-00144feabdc0.html#axzz2BNE3JGBp

http://online.wsj.com/article/SB10001424052970203406404578075030883638580.html

http://www.dcvelocity.com/articles/20121022-ups-68-billion-deal-to-buy-tnt-express-could-become-an-unwanted-package/

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