Congress grills DHL, UPS

Ohio's delegation fears loss of jobs, competition in deal

Columbus Dispatch

WASHINGTON -- DHL and United Parcel Service officials yesterday disputed assertions by Ohio lawmakers that a pending deal between the package-delivery services amounts to a "de facto merger" that would devastate southwestern Ohio's economy and drive up prices for customers.

The deal calls for UPS to become the exclusive air shipper for DHL in North America. The UPS air hub in Louisville, Ky., would handle DHL packages currently shipped into and out of Wilmington, Ohio, replacing ABX Air and ASTAR Air Cargo. The switch is expected to cost southwestern Ohio 8,000 jobs.

Burt Wallace, president of corporate transportation for UPS, said in a hearing of the House Judiciary Committee that "UPS will act as a vendor to DHL."

It "is not a merger or a joint venture; it is not an acquisition; it is not a consolidation," he said. The two companies will "continue to compete independently. We will each price and market our own brands and services. We will not share profits, costs or information about pricing of services to each other's customers."

"This is in no way a merger or an alliance," agreed John Mullen, CEO of DHL Express Global. "It's purely a capacity-sharing and outsourcing proposal."

But Ohio officials were having none of it.

The deal is "a de facto merger," said Rep. Mike Turner, R-Dayton. DHL is "basically going to become UPS plus."

It's a merger, said Rep. Marcy Kaptur, D-Toledo.

Sen. George V. Voinovich, R-Ohio, said current law permits antitrust review only after the agreement goes into effect and "after the likely competitive harm has permanently changed the competitive landscape."

Sen. Sherrod Brown, D-Ohio, said that Congress "needs to better understand what this proposed deal would mean for free-market competition. In my view, it can only mean trouble."

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