A long-term battle between UPS, FedEx, and DHL over competitive practices in Europe and the U.S. may be entering the final round.
In Europe, the European Commission (EC) affirmed a formal suit filed by UPS in 1994 that German postal giant Deutsche Post is setting predatory prices, cross-subsidizing its commercial products with revenue from its monopoly services and creating an unfair and uneven competitive playing field. Deutsche Post owns DHL, and the European ruling has triggered efforts in the U.S. to revoke DHL’s operating authorities in this country.
The European ruling requires a separation of Deutsche Post’s monopoly letter mail services and its competitive parcel business that competes directly with the private sector. A second EC investigation of the Deutsche Post's anti-competitive practices is currently underway.
As a result of the ruling, UPS and FedEx are calling on the U.S. Dept. of Transportation to revoke DHL Worldwide Express’s foreign air freight forwarder license. The license gives Deutsche Post – through DHL – the ability to establish interstate package delivery services in the U.S.
“UPS and FedEx’s initiatives are factually and legally groundless. UPS’ contention that the European decision somehow supports its complaint before DOT is totally misplaced,” said DHL Spokesman Jed Orme. “If anything, the decision supports DHL’s argument that there is no risk of cross-subsidization where you have a separate corporate entity, like DHL.”
The Teamsters, AFL-CIO, U.S. Chamber of Commerce, and ATA have also made that request, on the grounds the law deregulating the U.S. air freight market does not permit a foreign government-owned and supported postal monopoly with the ability to cross-subsidize express and parcel services to be licensed in the U.S.
DHL, however, is vigorously fighting both actions. In pleadings filed with the DOT, its two operating companies, DHL Worldwide Express and DHL Airways, said its operating authorities were granted in full compliance with the law after careful DOT review.