ACM: PostNL’s acquisition of Sandd requires further assessment

After a first assessment, the Netherlands Authority for Consumers and Markets (ACM) has come to the conclusion that a further assessment is necessary in order to reach a final decision with regard to the effects of the planned acquisition of Dutch postal operator Sandd by rival PostNL. If PostNL wishes to go through with the acquisition of Sandd, it will have to apply for a merger license with ACM.

Martijn Snoep, Chairman of the Board of ACM, explains: ‘Monopolies are almost always bad for consumers and businesses. That is why ACM will take a critical look at PostNL’s plans to acquire Sandd. However, we will also take a serious look at the benefits of this acquisition, including the question whether the acquisition is necessary for PostNL’s fulfillment of the statutory obligations it has with regard to consumer mail.’

ACM has concerns about the market for business mail, for example, by banks, hospitals, charities, and government organizations. PostNL and Sandd are the only two national operators on this market, which will make PostNL virtually a monopolist after the acquisition. The company would then be able to increase prices on that market, or reduce the quality of its services in order to save money. However, according to PostNL and Sandd, the acquisition is necessary for maintaining a postal delivery system that is efficient and viable. Both operators claim that the efficiency gains from the acquisition of Sandd are also necessary for the fulfillment of the statutory obligations in a rapidly declining market.

About the process

On 25 February 2019, PostNL notified ACM of its plans to acquire Sandd. In the preliminary assessment, ACM looked at various aspects including all relevant markets for letter mail and parcel delivery, the positions of competitors, and the dependence of suppliers and buyers. In addition, ACM received opinions from competitors and buyers. All of this information was taken into account in the analysis. One of ACM’s duties as independent authority is to assess mergers and acquisitions such as these, properly and thoroughly.

If PostNL applies for a license, ACM will further assess what effects the acquisition of Sandd will have on the markets for letter mail and adjacent markets (such as the markets for parcels). Such assessments normally have a 13-week period, which can be extended if more information is needed. The time that PostNL and Sandd need to answer additional questions will be added to those 13 weeks. So the decision period could be longer.

If ACM decides not to grant a license for the acquisition, PostNL and Sandd will be able to request the State Secretary for Economic Affairs and Climate Policy to grant a license based on reasons of general interest.

What does ACM do in merger and acquisition cases?

If companies wish to merge, ACM assesses in advance whether they will not become too powerful. This has been laid down in the Dutch Competition Act. The Act aims to protect consumers and businesses against higher prices, lower quality and/or reduced innovation.