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[FONT=ARIAL, SANS SERIF]7/21/2008 10:02:00 PM [/FONT][FONT=ARIAL, SANS SERIF]Email this article • Print this article [/FONT][FONT=ARIAL BLACK, ARIAL, SANS SERIF]Lawmakers call deal ‘de facto merger’[/FONT]
[FONT=ARIAL, SANS SERIF]CLINTON COUNTY
By GARY HUFFENBERGER
[email protected]
In a letter from the Ohio congressional delegation to the nation’s two antitrust enforcement agencies, the legislators say the proposed deal between United Parcel Service (UPS) and DHL will result in a “de facto merger” of the companies.
The term “de facto” means “in practice” or “in effect.” The lawmakers’ assertion that the deal will, in effect, have the outcome of a merger between UPS and DHL for the U.S. market is the strongest public language to date made by Ohio members of Congress, according to Wilmington Mayor David Raizk.
“Yes, it is a strong statement. And I appreciate that strong statement because I think it reflects what we’ve all been thinking and working on, but this is the first time we’ve seen it in print,” Raizk said Monday.
The page-and-a-half letter, not counting the signatures of the Congress members, was sent last week to the U.S. Department of Justice’s Antitrust Division as well as the Federal Trade Commission.
Among other purposes, antitrust law in general supervises the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to remedies such as an obligation to divest part of the merged business, according to Wikipedia.
The DHL press office on Monday released a statement after it was asked to comment on the lawmakers’ letter. Here it is verbatim.
“The proposed agreement under negotiation with UPS is not a merger, acquisition or joint venture. It represents a pro-competitive opportunity to safeguard and enhance a competitive choice in the U.S. domestic market to the benefit of consumers. The agreement would be solely a customer-vendor arrangement whereby DHL purchases certain airlift and related services from UPS, as we do currently from other providers,” according to DHL.
“Such arrangements have been common in the transportation industry for some time and are not subject to prior regulatory approval,” DHL added.
“We expect an agreement with UPS would deliver significant cost savings from reduced air lift costs, which will help ensure the sustainability of our U.S. express operations. If DHL cannot significantly cut its cost in its air service, it could end up affecting tens of thousands of employees of DHL and of our vendors and suppliers across the country,” the DHL statement concluded.
But the Ohio congressional delegation’s letter said by having UPS provide air carrier services for DHL in North America, the proposed contract “will allow for UPS and DHL to integrate key strategic assets.”
“If a final agreement is reached, DHL will surrender control over cost and service quality to one of its chief competitors, UPS, one of the two largest package delivery companies in the U.S. market,” said the congressional delegation’s letter.
The congresspersons’ letter added, “We are very concerned that any agreement between DHL and UPS in such a concentrated market increases the likelihood of anticompetitive collusion in that market.”
The legislators asked the two enforcement agencies to “immediately open” an investigation into the proposed agreement between DHL and UPS.
Copies of the letter were sent to the president of the German Federal Cartel Office along with the European commissioner for competition.
Previously, in a June 5 letter to U.S. Attorney General Michael Mukasey, U.S. Rep. Mike Turner and other Ohio legislators wrote, “As a result of meetings that Ohio members have had with representatives at DHL, it is our understanding that DHL has confirmed that their proposed strategic relationship with UPS in the U.S. may extend into other markets.”
The Sherman Antitrust Act was signed into law in 1890 and was named after its author, U.S. Sen. John Sherman, an Ohio Republican, chairman of the Senate Finance Committee. After passing in the Senate by a vote of 51-1, the legislation passed 242-0 in the House of Representatives.
http://www.wnewsj.com/main.asp?SectionID=49&SubSectionID=156&ArticleID=167913
[/FONT]
[FONT=ARIAL, SANS SERIF]CLINTON COUNTY
By GARY HUFFENBERGER
[email protected]
In a letter from the Ohio congressional delegation to the nation’s two antitrust enforcement agencies, the legislators say the proposed deal between United Parcel Service (UPS) and DHL will result in a “de facto merger” of the companies.
The term “de facto” means “in practice” or “in effect.” The lawmakers’ assertion that the deal will, in effect, have the outcome of a merger between UPS and DHL for the U.S. market is the strongest public language to date made by Ohio members of Congress, according to Wilmington Mayor David Raizk.
“Yes, it is a strong statement. And I appreciate that strong statement because I think it reflects what we’ve all been thinking and working on, but this is the first time we’ve seen it in print,” Raizk said Monday.
The page-and-a-half letter, not counting the signatures of the Congress members, was sent last week to the U.S. Department of Justice’s Antitrust Division as well as the Federal Trade Commission.
Among other purposes, antitrust law in general supervises the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to remedies such as an obligation to divest part of the merged business, according to Wikipedia.
The DHL press office on Monday released a statement after it was asked to comment on the lawmakers’ letter. Here it is verbatim.
“The proposed agreement under negotiation with UPS is not a merger, acquisition or joint venture. It represents a pro-competitive opportunity to safeguard and enhance a competitive choice in the U.S. domestic market to the benefit of consumers. The agreement would be solely a customer-vendor arrangement whereby DHL purchases certain airlift and related services from UPS, as we do currently from other providers,” according to DHL.
“Such arrangements have been common in the transportation industry for some time and are not subject to prior regulatory approval,” DHL added.
“We expect an agreement with UPS would deliver significant cost savings from reduced air lift costs, which will help ensure the sustainability of our U.S. express operations. If DHL cannot significantly cut its cost in its air service, it could end up affecting tens of thousands of employees of DHL and of our vendors and suppliers across the country,” the DHL statement concluded.
But the Ohio congressional delegation’s letter said by having UPS provide air carrier services for DHL in North America, the proposed contract “will allow for UPS and DHL to integrate key strategic assets.”
“If a final agreement is reached, DHL will surrender control over cost and service quality to one of its chief competitors, UPS, one of the two largest package delivery companies in the U.S. market,” said the congressional delegation’s letter.
The congresspersons’ letter added, “We are very concerned that any agreement between DHL and UPS in such a concentrated market increases the likelihood of anticompetitive collusion in that market.”
The legislators asked the two enforcement agencies to “immediately open” an investigation into the proposed agreement between DHL and UPS.
Copies of the letter were sent to the president of the German Federal Cartel Office along with the European commissioner for competition.
Previously, in a June 5 letter to U.S. Attorney General Michael Mukasey, U.S. Rep. Mike Turner and other Ohio legislators wrote, “As a result of meetings that Ohio members have had with representatives at DHL, it is our understanding that DHL has confirmed that their proposed strategic relationship with UPS in the U.S. may extend into other markets.”
The Sherman Antitrust Act was signed into law in 1890 and was named after its author, U.S. Sen. John Sherman, an Ohio Republican, chairman of the Senate Finance Committee. After passing in the Senate by a vote of 51-1, the legislation passed 242-0 in the House of Representatives.
http://www.wnewsj.com/main.asp?SectionID=49&SubSectionID=156&ArticleID=167913
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