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Case No COMP/M.1915 - the Post Office/TPG/SPPL

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Case No COMP/M.1915 - the Post Office/TPG/SPPL Case No COMP/M.1915 - The Post Office/TPG/SPPL. Only the English text is available and authentic. REGULATION (EEC) No 4064/89 MERGER PROCEDURE Article 8(2) Date: 13/03/2001 This text is made available for information purposes only and does not constitute an official publication. The official text of the decision will be published in the Official Journal of the European Communities. Commission Decision of 13.03.2001 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case No COMP/M.1915 - The Post Office/TPG/SPPL) (Only the English text is authentic) (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to the Agreement on the European Economic Area, and in particular Article 57(2)(a) thereof, Having regard to Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings5, as last amended by Regulation (EC) No 1310/972, and in particular Article 8(2) thereof, Having regard to the Commission’s decision of 15 November 2000 to initiate proceedings in this case, Having given the undertakings concerned the opportunity to make known their views on the objections raised by the Commission, Having regard to the opinion of the Advisory Committee on Concentrations3, Whereas : 1. On 24 July 2000 the Commission received a notification of a proposed concentration pursuant to Article 4 of Regulation (EEC) No. 4064/89. The notification was completed on 10 October 2000. 2. Through the notified transaction the undertakings The Post Office ("TPO"), United Kingdom, TNT Post Group N.V. ("TPG"), the Netherlands, and Singapore Post Private Limited ("SPPL"), Singapore, will acquire within the meaning of Article 3(1)(b) of the Council Regulation joint control of two newly created joint ventures ("Delta" and "NewCo"). 5 OJ L 395, 30.12.1989, p. 1; corrected version in OJ L 257, 21.9.1990, p. 13. 2 OJ L 180, 9.7.1997, p. 1. 3 OJ … This text is made available for information purposes only and does not constitute an official publication. 3. By decision dated 15 November 2000, the Commission found that the notified operation raised serious doubts as to its compatibility with the common market and initiated proceedings pursuant to Article 6(1)(c) of Regulation (EEC) No 4064/89 and Article 57(2)(a) of the EEA Agreement. I. THE PARTIES' ACTIVITIES 4. TPO is the national postal operator in the United Kingdom. It provides the full range of postal services including domestic and outbound cross-border mail as well as domestic and outbound cross-border parcels. TPO also has commercial activities, including outbound cross border mail services, in a wide range of other countries such as Germany, France, Netherlands and the USA. 5. TPG is the national postal operator in the Netherlands. It resulted from the splitting of the former Koninklijke PTT Nederland NV ("KPN") group into KPN (telecom) and TPG. TPG contains the logistics, express and mail businesses of the former KPN-group. TPG is the parent company of Koninklijke PTT Post BV ("PTT Post"), the Dutch postal operator. TPG provides outbound cross-border mail services through PTT Post in the Netherlands and through its TNT International Mail business in more than 45 countries including the Netherlands. 6. SPPL is the national postal operator in Singapore. It currently has extremely limited activities in the EEA. II. THE OPERATION 7. The operation consists of the formation of two joint ventures between TPG, TPO and SPPL which are to be active in the provision of outbound cross-border mail services and to a limited extent in providing outbound cross-border parcel services. They will not provide express services. 8. The joint venture "Delta" will be active in the provision of the said services throughout the world except the Asia Pacific region. The joint venture "NewCo" will provide these services in the Asia Pacific region. 9. TPG will contribute its TNT International Mail division to the joint ventures: those activities of TNT International Mail outside the Asia Pacific region, including those in the Netherlands, will be contributed to Delta, those in the Asia Pacific region to NewCo. The TNT International Mail Division carries out outbound cross-border mail activities and to a limited extent outbound cross-border parcel services (Easy Parcel product). TPG will retain inter alia the outbound cross-border mail activities of PTT Post in the Netherlands and domestic and cross border parcel delivery services. It will also retain the TNT Express business. 10. TPO will contribute its International Mail Division to Delta, which carries out outbound cross- border mail services outside the United Kingdom. All its activities are outside the Asia Pacific region. TPO will furthermore contribute Royal Mail US Inc, which is active in outbound cross- border mail services in the US. TPO will retain inter alia its United Kingdom domestic and outbound cross-border mail business, domestic and cross border parcel business. TPO furthermore retains its European Domestic Division, which includes the Red Mail Group (France), which is owned by TPO, and the CityMail Sweden AB, in which TPO holds an 67% stake. Even though they provide some outbound cross-border mail services in their respective countries, these are not their main activities. 11. SPPL is legally not in a position to contribute its outbound cross-border mail activities to NewCo. Therefore SPPL will contribute its outbound cross-border mail business through a 2 This text is made available for information purposes only and does not constitute an official publication. contract with NewCo, under which NewCo will carry out SPPL's outbound cross-border mail activities as a sub-contractor on behalf of SPPL. SPPL will retain inter alia its domestic mail business, inbound cross-border mail and local and cross border parcel service. 12. For a transitional period of three years, Delta will sell outbound cross-border mail services from other countries with a destination in the United Kingdom on behalf of TPO under a sales and marketing agency arrangement. For the same transitional period Delta will be appointed as Koninklijke PTT Post BV's agent to sell and market its mail services to customers abroad for their mail with destination in or via the Netherlands. At the end of this period the agency agreements will terminate and the relevant businesses will be contributed to Delta. III. CONCENTRATION 1. Joint control 13. The joint ventures will be jointly controlled by TPO, TPG and SPPL. 14. Delta's share capital will be held by the parents in the following proportion: TPG will hold 51% of the shares, whereas TPO and SPPL will hold 24.5% each. The joint venture agreement gives each parent a veto right with regard to strategic decisions, such as the contents of the business plan, the business strategy and the budget. 15. NewCo's share capital will be held jointly by Delta and SPPL at 50% each. Delta and SPPL therefore jointly control NewCo. Since Delta is in turn jointly controlled by TPO, TPG and SPPL, the latter three companies ultimately control NewCo together. 2. Full functionality 16. The joint ventures will perform on a lasting basis all the functions of an autonomous economic entity. 17. Delta will carry out all the functions necessary to provide outbound cross-border mail services. Delta will act as a consolidator, putting together either services provided by themselves or by subcontractors in order to provide outbound cross-border mail services to business customers. Consolidators collect and group outbound cross-border mail to a specific destination and subsequently negotiate a special rate with public postal operators or with local delivery companies in order to distribute the “consolidated” mail in the country of destination. According to the parties, consolidators outsource approximately 80% of their operating costs. Delta will not be obliged to outsource services to its parents. However, Delta will enter into agreements with its parents which provide that the parents provide delivery services for Delta within the parents' home countries. They furthermore provide that the parents accept outbound cross border mail from Delta for distribution to the final recipient in the destination country. With the businesses transferred to Delta by TPO and TPG, Delta will have the resources to operate on a market for outbound cross-border mail, performing the functions normally carried out by undertakings operating on the same market. 18. NewCo will also carry out the functions generally carried out by competitors providing outbound cross-border mail services. Like Delta it will act as a consolidator. Even though SPPL does not contribute its outbound cross-border mail business to NewCo, the joint venture will have sufficient resources to compete on the market through the business contributed by TPG. 3 This text is made available for information purposes only and does not constitute an official publication. IV. COMMUNITY DIMENSION 19. The undertakings TPG, TPO and SPPL have a combined aggregate world-wide turnover in excess of 5,000 million EUR7 (TPG, EUR 8,468 million; TPO, EUR 11,839 million and SPPL, EUR 176 million). Two of them have a Community-wide turnover in excess of 250 million EUR each (TPG, EUR […]*; and TPO, EUR […]*), but they do not achieve more than two- thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension. It does not constitute a co-operation case under the EEA Agreement, pursuant to Article 57 of that Agreement. V. COMPATIBILITY WITH THE COMMON MARKET A. Background 20. This transaction has to be seen in the light of the ongoing and future liberalisation of the postal sector.
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