Affected market: Courier activities
Please note that square brackets indicate figures or text which have
been deleted at the request of the parties for reasons of commercial
Fedex Corporation (Fedex) provides transportation; e-commerce and
business services through owned and independently operated companies
under the Fedex brand. In the UK, it offers international document,
parcel and freight delivery services focusing on the express delivery
ANC Holdings Limited and its associated companies (ANC) provides a
range of distribution and logistic services throughout a network of
locally based depots across the UK, many of them are franchises. These
include domestic and international express delivery services. Its UK
turnover in the year ended 31 March 2006 was some £156 million.
Fedex acquired the entire issued share capital of ANC on 15 December
2006. The statutory deadline therefore expires on 14 April 2007. The
administrative deadline is 18 May 2007.
As a result of this transaction Fedex and ANC have ceased to be
distinct. The UK turnover of ANC exceeds £70 million, so the turnover
test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is
satisfied. The OFT therefore believes that a relevant merger situation
has been created.
FRAME OF REFERENCE
The OFT [see note 1] and the European Commission [see note 2] have previously
assessed the markets for domestic and international delivery services
under three parameters: time (standard or express services), destination
(domestic and international services) and weight (documents, parcel and
Standard service provides delivery within two to three days. Express
services tend to be time-sensitive and delivery takes place overnight or
within 1-2 days depending on the destination. Parcels and documents are
considered distinct from freight on the basis of weight. Parcel (and
document) delivery typically concerns packages up to 31.5 kg. Fedex
considered that the weight differentiation point between parcels and
freight was 68 kg; however, this discrepancy has no impact on the
outcome of this case given the parties' limited share of supply.
In the previous BET UK/Target Express decision, absent any competition
concerns on the narrowest possible delineation, the OFT did not need to
conclude on the frame of reference but found that: 1) there was a lack
of demand- and supply- side substitutability between standard and
express delivery services; 2) parcel services were considered not to
include freight delivery services; and, 3) there was a lack of demand-
and supply-side substitutability between domestic and international
Fedex has defined the markets where the parties are active on the above
basis and the OFT has not seen any evidence or received any
representations from third parties suggesting it should divert from the
frame of reference used in the BET UK/Target Express decision.
On the basis of customer perception, price differences, and the national
organisation of pick-up, delivery and marketing, in its BET UK/Target
Express decision, the OFT (in line with the Commission’s past
decisional practice [see note 3] has deemed both domestic and international
express delivery services for parcel, documents and freight respectively as
national in scope. Some decisions [see note 4] have, nonetheless, suggested
that there may be a current trend towards a European or global market
due to the emergence of some global customer accounts.
While the balance of the evidence in this case points towards a UK-wide
frame of reference, this transaction does not raise any competition
concerns on this national basis. It has therefore not been necessary to
conclude on the geographic scope.
Conclusion on frame of reference
While it has not been necessary to reach a conclusion on the product or
geographic frame of reference in this case, as no competition concerns
arise even taking into account the narrowest possible frame of
reference, the OFT has taken a cautious approach and considered this
case on the basis of the provision of: 1) international standard parcel
(and document) delivery services in the UK; 2) international express
parcel (and document) delivery services in the UK; and, 3) international
express freight delivery services in the UK.
Pre-merger, Fedex and ANC's activities were mainly complementary. Fedex
had no significant domestic services while ANC's business was focused
on its domestic delivery services with relatively minor operations in
the international segments. Third parties agreed that they were not
close competitors. Nearly all third parties were unconcerned as there
are several alternative providers of similar or larger size they can
easily switch to at no or minimal cost.
In international standard parcel and document delivery services and in
international express freight delivery services, the merged entity has a
combined share of supply of about [0-5] per cent with negligible
increments. In international express parcel and document delivery the
merged entity has around [5-15] per cent share of supply (with an
increment of less than [0-5] per cent). In light of these shares and
absent any horizontal third party concerns, the OFT does not consider
that this transaction raises the realistic prospect of a significant
lessening of competition on a horizontal level.
Fedex and also (to a negligible extent) ANC provided international
express freight airport to airport services. One third party expressed
concerns that the merger would reduce competition in the air express and
air freight markets in the London Heathrow area particularly. It was
suggested that Fedex could foreclose the provision of wholesale air
express and air freight services to smaller courier companies or raise
their costs. Given ANC’s negligible presence in these segments (less
than [0-5%), the OFT does not believe that this merger is, in itself,
capable of giving rise to vertical concerns that raise the realistic
prospect of a significant lessening of competition.
THIRD PARTY VIEWS
All third parties (except one) who responded were unconcerned about this
transaction. The one concern has been addressed above.
The parties overlapped in the provision of international standard and
express parcel and document delivery services and international express
freight delivery services in the UK respectively. ANC has less than
[0-5] per cent share of supply in each of these three segments. ANC
focuses on domestic services whereas Fedex focuses on international
services. Several third parties commented on the complementary nature of
the merging parties’ services.
In each segment, the merger does not raise the realistic prospect of a
significant lessening of competition with increment to share of supply
of less than [0-5] per cent. The highest estimated combined share of
supply is around [5-15] per cent in international express parcel and
document delivery services (including a negligible post-merger
A wide range of viable alternative suppliers with similar or marginally
lower shares of supply will continue to exist post-merger and the
parties have submitted evidence demonstrating that the parties are not
considered to be each other’s closest competitors. Third parties who
have commented on this merger have confirmed this statement. In
addition, third party respondents did not consider switching to be
difficult and all (except one) were unconcerned.
Consequently, the OFT does not believe that it is or may be the case
that the merger has resulted or may be expected to result in a
substantial lessening of competition within a market or markets in the
This merger will therefore not be referred to the Competition Commission
under section 22(1) of the Act.
- Completed acquisition by BET UK Limited of Target Express Holdings
Limited, OFT decision of 7 March 2007 (BET UK/Target Express decision).
- For example COMP/M.3155 – Deutsche Post/Securicor, COMP/M.2908 –
Deutsche Post/DHL, COMP/M.1405 – TNT Post Group/Jet Services,
COMP/M.1347 – Deutsche Post/Securicor.
- For example IV/M.843 PTT Post/TNT/GD Worldwide.