By Foo Yun Chee
BRUSSELS (Reuters) - An EU court agreed with United Parcel Service <UPS.N> on Tuesday that the EU had wrongly blocked its takeover of Dutch peer TNT four years ago, potentially allowing the world's largest package delivery company to sue regulators for damages.
The European Commission rejected the 5.2 billion euro ($5.5 billion) deal in 2013, saying UPS had not offered sufficient concessions to allay concerns that the deal would hurt consumers. The deal would have expanded its presence in Asia and Latin America.
While TNT has since been bought by FedEx <FDX.N> in a 4.4 billion euro deal approved by the Commission last year, the ruling by Europe's second-highest court could affect other contentious deals.
UPS subsequently challenged the EU decision at the Luxembourg-based General Court. Judges annulled the EU decision on Tuesday, citing a procedural irregularity.
The court said the Commission had infringed UPS's rights of defense by using a different econometric model in its analysis than that used in previous exchange of views and arguments.
"UPS might have been better able to defend itself if it had at its disposal, before the adoption of the contested decision, the final version of the econometric model chosen by the Commission," it said.
While the ruling is not expected to have any impact on the package delivery market, it shows that regulators have to present and communicate their case clearly to merging companies, said James Killick, a partner at law firm White & Case.
"I don't think you can undo the two mergers. You can't rewrite history. The ruling shows, however, the importance of due process especially in the merger process where time is short," he said.
UPS could potentially now sue for damages, he added.
UPS said it was pleased with the court's reasoning.
"While the decision in UPS's favor makes a number of points, the most significant of this decision is its impact in helping to preserve a competitive environment in Europe by clarifying the procedure and relevant criteria for merger approval," it said.
The Commission said it was studying the judgment.
($1 = 0.9468 euros)
(Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Edmund Blair)