In September 2019, the Dutch Authority for Consumers and Markets (“ACM”) prohibited the transaction by which former Dutch state postal monopoly PostNL would acquire rival operator Sandd. The decision followed an in-depth Phase II investigation. PostNL and Sandd argued that the combination of their postal networks was necessary to ensure the continuity and affordability of postal services, in the context of rapidly declining postal volumes. However, the ACM rejected their arguments as the acquisition would create a monopolist in the postal delivery market, with the risk of significant price increases outweighing potential efficiencies or universal postal service obligations.
One month later, in October 2019, the Dutch Minister of Economic Affairs & Climate overruled the ACM’s decision based on overriding public interests, but subject to conditions to, for example, ensure cost-based postal tariffs and provide regional transport companies access to PostNL’s national network. It was the first time in the Netherlands that the Minister has overruled the refusal of a merger license by the ACM.
Compass Lexecon conducted an independent review of the acquisition from an economic perspective. In particular, the ACM asked us to review the efficiency defense by the parties with regards to whether the efficiencies were significant, verifiable, merger-specific and passed on to consumers. Our analysis confirmed the conclusions by the ACM.
The Compass Lexecon team included Miguel de la Mano and Guillaume Duquesne.