State reviewing antitrust implications of DHL-UPS deal

Gov. Ted Strickland said he is asking his top legal advisers to investigate whether DHL's proposal to hire the rival United Parcel Service to fly DHL's U.S. cargo would violate U.S. antitrust laws by reducing competition in the express package delivery market.

Strickland said on Monday, June 2, that he has asked his chief legal counsel, Kent Markus , to examine any possible antitrust issues and will soon be making a similar request of his newly appointed state attorney general, Nancy Rogers.

The state has been accommodating to DHL with support for the expansion of its North American air freight hub at Wilmington in recent years, Strickland said. Ohio wants to take all possible actions to avert the possible loss of 6,000 jobs at Wilmington that has been forecast if the DHL work there is shifted to UPS' sorting and delivery facilities elsewhere, the governor said. ABX Air Inc. and ASTAR Air Cargo currently both fly DHL cargo from Wilmington and employ a combined 1,150 pilots, plus thousands of other workers there.

"I am not willing to simply acquiesce to what DHL is suggesting here without making sure that any antitrust issues are resolved to our satisfaction, and that any possible future use of the facility which would keep it a viable, job-producing facility must be explored," Strickland said in a telephone interview with the Dayton Daily News. "I think DHL has an obligation to the community and to the state, because we have tried to work in such a way as to be good partners."

Strickland said that two top DHL officials, John Mullen, the company's global chief executive officer, and Wolfgang Pordzik, its head of government relations in the United States, are to meet with him Wednesday morning in Columbus. They are to spend Tuesday meeting in Washington with members of Congress including Ohio Sens. George Voinovich and Sherrod Brown and Rep. Mike Turner, R-Centerville, the governor said.

"When I meet with the CEO, I will hope to explore all matters with him, including any possibility of having a change in DHL's decision," Strickland said. "My preferred outcome, obviously, would be for the jobs to remain as they are."

DHL does not believe that any regulatory approval is needed for the proposed deal with UPS because it would simply be a relationship between vendors, but the company will respond to any questions from regulators, DHL spokesman Jonathan Baker said Monday. The U.S. Department of Justice and the Federal Trade Commission have jurisdiction in antitrust matters.

The DHL meetings with Congress and Strickland are "courtesy visits" as part of the company's ongoing dialogue with government officials, Baker said.

The Dayton-Montgomery County Port Authority in March 2007 sold $270 million in bonds to support DHL's expansion and upgrading of the Wilmington hub in recent years. That requires DHL to repay the bonds over 40 years, which would put pressure on the company to find a new use for the one-million-square-foot Wilmington sorting facility and airport if jobs are lost there and it generates less revenue, said Ron Parker, the port authority's executive director.

"They're the ones that are on the hook for the bonds and the debt," Parker said. "You can bet that they're going to want to solve that problem."

Any future use for the Wilmington hub would be subject to discussions with the ABX Air and ASTAR airlines and local authorities, Baker said.

"There's nothing concrete, as of yet," Baker said.