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European Union Competition Commissioner Joaquin Almunia holds a news conference on the proposed merger between United Parcel Service Inc. and TNT Express in Brussels Jan. 30, 2013. EU antitrust regulators blocked a €5.2-billion ($7-billion U.S.) bid by UPS for TNT Express as expected, saying the firm had not offered adequate concessions to ensure the deal would not hurt consumers.

YVES HERMAN/REUTERS

EU antitrust regulators blocked a €5.2-billion ($7-billion) bid by United Parcel Service Inc. for TNT Express, denting the world No. 1 package delivery company's hopes of expanding its presence in Asia and Latin America.

The EU regulatory veto means the world's No. 1 package delivery company may now have to grow via smaller acquisitions or organically, while TNT could come under pressure to change management or revise its business strategy to deflect activist shareholders.

The European Commission said UPS had not offered adequate concessions to ensure the deal would not hurt consumers. UPS had flagged the negative decision on Jan. 14, saying it would withdraw its bid because of opposition from the EU regulator.

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The deal, its biggest ever, would have given it access to Dutch peer TNT's stronger networks in fast-growing Asian markets and Latin America and increased its non-U.S. revenues to 36 per cent of total sales from the current 26 per cent.

The European Commission, the EU competition watchdog, said the proposed merger would have reduced competition in 15 EU countries.

"(The deal) would have drastically reduced choice between providers and probably led to price increases," EU Competition Commissioner Joaquin Almunia said in a statement.

"We worked hard with UPS on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems we identified."

UPS had offered to sell TNT's operations in 15 countries, mainly in eastern Europe, with the principal potential buyer France's DPD, but failed to convince the Commission of the merits of its proposal.

TNT is the leading postal delivery company in Europe, with an 18 per cent market share against the 10 per cent of UPS. Deutsche Post's DHL unit has 15 per cent while FedEx is a distant fourth player.

TNT shares extended losses after the Commission's decision and were down 2.5 per cent to 5.56 euros by 1039 GMT.

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The decision is Mr. Almunia's third veto of a takeover deal in as many years. He blocked the $7.4-billion merger of NYSE Euronext and Deutsche Boerse about a year ago and a plan to combine Greek airlines Aegean and Olympic Air two years ago.

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