Deutsche Post AG / Airborne Inc

OFT closed case: Anticipated acquisition by Deutsche Post AG of Airborne Inc.

Affected market: Postal delivery

No. ME/1212/03

The OFT's decision on reference under section 33 given on 11 July 2003

PARTIES

Deutsche Post AG (DPAG) is primarily involved in providing the national postal service in Germany under an exclusive licence. In the UK DPAG is active through DHL Holdings (UK) Ltd (DHL), Securicor Omega Holdings Ltd (SOH) and Danzas Ltd.

Airborne Inc (Airborne) is an express delivery and freight company based in the US. In the UK Airborne is active in London, Birmingham, Bristol and Glasgow.  Airborne's UK turnover in 2002 was £7.5 million.

TRANSACTION

DPAG proposes to acquire Airborne. The date of notification was 6 June 2003 and the 40 day administrative deadline is 1 August 2003.

JURISDICTION

As a result of this transaction DPAG and Airborne will cease to be distinct.  The parties overlap in the supply of international services consisting of express delivery; express freight; and freight forwarding. The share of supply test in section 23 of the Act is met for international express delivery services.  A relevant merger situation has been created.

RELEVANT MARKET

The EC has examined these services in several cases, including DPAG's recent move from joint to sole control of SOH, DPAG/DHL (COMP/M.2908), DPAG/Air Express (COMP/M.1794) and DPAG/Securicor (COMP/M.3155).

Product market

The EC considered international express delivery of parcels to differ from standard delivery by the quality and reliability of the service provided.  This type of service often includes guaranteed delivery dates, proof of delivery and the possibility to track a package whilst in transit.

The EC considered international express freight to differ from international express delivery by size and weight of products transported and the time taken to deliver the goods. 

International freight forwarding is the standardised transport of heavy items by road, sea and air as necessary.

Given the lack of competition concerns arising in this case, it has not been necessary to reach a conclusion on product market definition.

Geographic market

The EC has previously considered services such as these to have a national geographic dimension.  This was considered appropriate due to the varying regulatory environments and the need for some local presence.  In this case, due to the lack of competition concerns, it has not been necessary to reach a conclusion on the relevant geographic dimension.

HORIZONTAL ISSUES

For the above product sectors, the level of overlap between the parties within the UK is minimal, with (in 2001) DHL accounting for approximately [30-40] per cent [see [note 1]] of international express delivery services and Airborne adding an increment of less than one per cent.  There are numerous alternative suppliers of these products for customers in the UK.

VERTICAL ISSUES

No significant vertical issues arise as a result of this transaction.

ASSESSMENT

This transaction gives rise to a small increment in the supply in the UK of international services consisting of express delivery; express freight; and freight forwarding.  This small increase is unlikely to have any significant effect on the parties' ability to act independently of their competitors.  The existence of numerous large international and national firms that also provide these services is likely to represent a sufficient constraint in preventing anti-competitive effects arising from this transaction.  The merger does not appear to result in a substantial lessening of competition within a market or markets in the United Kingdom for goods or services.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

NOTES

1. Actual figures replaced by a range at the request of DPAG.

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