Congress looking into proposed DHL-UPS deal
Tuesday, September 09, 2008
WASHINGTON — The U.S. House Judiciary Committee is looking into whether DHL's proposal to hire United Parcel Service to handle DHL's U.S. cargo sorting and flying would restrict competition in the express delivery market.
Officials of the state of Ohio, city of Wilmington, DHL and UPS were among those scheduled to testify at a hearing before the committee Tuesday afternoon, Sept. 9.
DHL said in May that it would reduce the size of its U.S. network and hire UPS in an effort to reduce U.S. losses that German-owned DHL says are close to $1 billion annually. UPS has said it would handle the DHL work at the UPS hub in Louisville, Ky. Ohio officials say that would wipe out at least 8,200 jobs at DHL's Wilmington air freight hub, the region's biggest employer.
Next week, the U.S. House Transportation and Infrastructure Committee is to conduct a similar hearing as opponents of DHL's plan bring it under scrutiny in Washington. The opponents also are urging the U.S. Department of Justice to investigate whether a DHL-UPS deal would violate antitrust law by reducing competition in the shipping market. Opponents say it would essentially leave the market to rivals UPS and Federal Express, and undercut DHL's ability to compete.
DHL and UPS say it would not violate antitrust law. They said their proposed deal would simply be an arrangement between a vendor and customer, and that it would not require a government antitrust review or clearance.
The companies have said they are negotiating what would be a 10-year agreement that they hope to conclude within weeks.
