UPDATE 1-Dutch regulator ACM blocks proposed postal services merger

The Dutch market regulator said on Thursday it would not allow the proposed 130 million euro ($144.8 million) acquisition by postal service company PostNL of its main rival Sandd because it would create a monopoly.

The Netherlands' Authority for Consumers and Markets said that after careful consideration it "will not provide a license" for the acquisition, proposed in February. The companies had proposed combining the two largest mail companies in the country. PostNL employs 18,000 delivery staff and delivers 1.78 billion letters annually, compared with 16,000 delivery staff at Sandd and 720 million letters.

PostNL, which proposed merging the services after years of declines in postal volume, said the companies "will ask the Ministry of Economic Affairs and Climate Policy to approve the merger of their postal networks." The ACM said the merger was not in the best interests of customers and would result in price increases of 30-40%.

"The proposed acquisition of Sandd by PostNL would create a monopoly in postal delivery," ACM chairman Martijn Snoep said. "People, companies and governments will pay more for mail delivery," ACM said the benefits would be too minimal to compensate for the negative consequences of doing away with the competition.

The postal delivery will not be at risk of failing to carry out its mandate if the acquisition does not happen, it added. ($1 = 0.8973 euros)