German victory in US express war
Deutsche Post won a major battle with DHL against package delivery rivals when the US government denied a petition to revoke its freight forwarding operations.
The Transportation Department ruled that it would not launch a formal probe of the ownership of Deutsche Post of US-based DHL Airways.
The DO decision: 'The U.S. Department of Transportation (DOT) today ruled on several petitions directed against two DHL companies: DHL Worldwide Express (DHLWE) and DHL Airways.
DOT denied a petition to cancel the registration of DHLWE as a foreign freight forwarder. The department said that there is no evidence that DHLWE is competing or will compete unfairly with U.S. companies, but that the department could take action in the future if there are specific allegations of unfair competition.
Also, while declining to initiate a formal enforcement proceeding to investigate the citizenship of DHL Airways, the department said that it would continue its ongoing informal review of the cargo carrier to make sure that it remains a citizen of the United States as defined by law.
"We have an affirmative responsibility to make sure that competition continues to protect the interests of consumers," U.S. Transportation Secretary Norman Y. Mineta said. "While we are denying these petitions, we will continue to ensure that competition in our aviation markets remains fair."
DHL is a related group of companies that operate a worldwide express package business under the "DHL" logo. These companies include DHL International Limited, the parent company incorporated in Bermuda; DHLWE, a foreign air-freight forwarder licensed to operated in the United States; and DHL Airways, a U.S. airline licensed to provide direct air transportation. A freight forwarder is a company that does not operate its own aircraft but is responsible for the transportation of property.
In February, United Parcel Service (UPS) asked DOT to cancel the registration of DHLWE to operate as a foreign freight forwarder. UPS argued that Deutsche Post, the majority owner of a holding company that owns DHLWE, would use its monopoly profits to enable DHLWE to engage in predatory pricing in the United States. Deutsche Post is the partially privatized postal service of Germany.
In addition, Federal Express (FedEx) and UPS filed complaints in January with DOT, alleging that after a proposed corporate reorganization, foreign nationals, including Germany's postal system Deutsche Post, would control DHL Airways. Under U.S. law, at least 75 percent of the voting stock of a U.S. airline must be owned by citizens of the United States, and the president and two-thirds of the board of directors and other managing officers must be U.S. citizens. In addition, the carrier must be controlled by U.S. citizens. FedEx and UPS asked DOT to conduct a formal enforcement investigation of DHL Airways' citizenship.
The department, in denying UPS' petition against DHLWE, noted that foreign companies may be licensed as freight forwarders in both domestic and international air transportation. DOT said that there is no evidence that there has been any unfair competition in the U.S. market by any of these DHL companies. UPS has presented no evidence that Deutsche Post is subsidizing DHLWE's operation, and the department said that an application for a freight-forwarder license should not be rejected solely because the applicant is not privately owned.
However, if specific allegations of unfair competition against the company are made in the future, the federal government can take action to address them. The department also noted that there is no evidence that foreign air-freight forwarders have achieved a significant market share, unlike UPS, which holds 53 percent of the domestic market, and FedEx, which has a 26 percent market share. DHLWE, by contrast, is estimated to have a market share of 0.6 percent.
In dismissing the complaint about DHL Airway's citizenship, the department noted that it has been conducting an informal review of the carrier's citizenship that predates the complaints, and that it will continue this review, adding that it will consider the material filed by FedEx and UPS in the context of this review. In a related action, DOT dismissed FedEx's petition to revoke DHL Airways' authority to operate scheduled all-cargo service between the United States and Kuwait.
Source; DoT
