New Gunners Line Up for Air War

Posted April 29, 2003 at 5:25pm

Airborne Inc., the nation’s third-largest package hauler, has hired the law firm O’Melveny & Meyers to push its interests on the company’s proposed merger with DHL Worldwide Express International.

In a filing on Capitol Hill in early April, several big guns from the firm registered to lobby Congress on the issue: Jeremy Bash, Donald Bliss, William Coleman, Ronald Klain and Anne McGuire. [IMGCAP(1)]

The proposed merger has caused waves on both sides of the Atlantic. DHL is a subsidiary of Deutsche Poste, Germany’s former postal service, which is now privatized. Although Deutsche Poste is officially independent of Berlin, the German government holds a majority stake in the postal service.

If the German company gets control of Seattle-based Airborne, the Deutsche Poste and DHL alliance would gain a strategic position in the U.S. air-parcel-delivery market — a market long dominated by Atlanta-based United Parcel Service and Memphis, Tenn.-based FedEx.

The one regulatory obstacle that DHL, Deutsche Poste and Airborne need to maneuver around — and which some say FedEx and UPS want to exploit — is a federal law requiring that U.S. airlines be controlled by American companies.

Under the proposed merger, DHL would gain control over Airborne’s ground-based delivery services. However, Airborne’s plane fleet would be shifted into an independent airline, owned 100 percent by American stakeholders. One sticking point: A majority of the new carrier’s business would come from DHL, which some say creates a gray area in terms of ownership. An Airborne spokesman said the merger would be compliant to foreign-ownership regulations.

Airborne and DHL contend that the FedEx and UPS “duopoly” controls nearly 80 percent of the market. The two believe their greater presence in the U.S. market will allow for greater competition, which will benefit American consumers and create jobs.

“UPS and FedEx’s massive lobbying efforts are a predictable attempt to block competition in the U.S. carrier market and distract attention from the real issue, which is that the DHL Airborne transaction will bring additional choice to customers and opportunities to American workers,” the Airborne spokesman said.

But FedEx and UPS command a greater presence on K Street and Capitol Hill, making the two delivery giants a force to be reckoned with. According to PoliticalMoneyLine.com, FedEx has increased its donations to leadership PACs by 25 percent and has more money in the bank — $2 million — than any other corporate political action committee in Washington.

FedEx doled out $108,500 to leadership PACs in the first three months of the year, with Republicans in the GOP-dominated Congress benefiting over Democrats by a 2-to-1 margin.

Besides a well-stocked in-house lobbying roster, FedEx also relies on a number of K Street shops, including VanScoyoc Associates, Thompson Coburn, Denny Miller Associates, Bill Simpson & Associates and The Federalist Group.

UPS has a veteran in-house lobbying shop as well, but also uses the services of Akin Gump Strauss Hauer & Feld, Clark/Bardes, Gerchick-Murphy Associates, Hogan & Hartson and Wayne Arthur Schley to represent its interests.

Deutsche Poste and DHL rely on Bergner, Beckorny, Castagnetti, Hawkins & Brain.

The issue is timely. Earlier this week the Transportation Department held a hearing to examine the “citizenship” of DHL. An administrative law judge has until Sept. 2 to investigate what FedEx calls “quirky ownership.”

“Our concern is the entire world. They are not a small player,” said FedEx spokeswoman Kristin Krause.

“It is a little unfair,” she added, saying that if DHL becomes a U.S. carrier, “we should have reciprocal rights in Germany.”

The Transportation Department review came after an intense lobbying effort by UPS in late March and early April. “We feel there has been misinformation put out by DHL’s interests,” said UPS spokesman David Bolger.

Just before Congress went on recess, Senate Appropriations Chairman Ted Stevens (R-Alaska) added an amendment to the supplemental spending bill mandating the special administrative law judge review regarding DHL’s citizenship.

The Goldman Touch. When Goldman, Sachs & Co. CEO-turned-Sen. Jon Corzine (N.J.) took over the chairmanship of the Democratic Senatorial Campaign Committee, most close observers expected to see a huge increase in the amount of money the Wall Street firm pumped into the committee.

Turns out the investment banking giant’s executives were one of the most generous financial supporters to one Democratic Senator in particular — but it wasn’t Corzine.

According to fundraising data for the first three months of the year compiled by the Center for Responsive Politics, Goldman Sachs executives gave $60,750 to the presidential campaign of Sen. John Edwards (D-N.C.).

The donations helped to make Goldman Sachs the largest single giver to Democratic presidential nominees with a total of $78,750, according to CRP.

But Goldman was not the biggest giver to the Edwards campaign. That prize went to the law firm Baron & Budd, whose employees contributed a total of $62,250 to Edwards.

Overall, 19 of the top 25 contributors to presidential campaigns in the first three months of the year were law firms.

Among other Democratic candidates, Skadden, Aarps was the top giver to Sen. John Kerry (D-Mass.) with $53,400; St. Louis-based Anheuser-Busch was the largest benefactor of Rep. Richard Gephardt (D-Mo.) with $39,000; and Lehman Brothers gave more money than anyone else to Sen. Joe Lieberman (D-Conn.) by contributing $31,000.