Opinion ID: 777188
Heading Depth: 2
Heading Rank: 1

Heading: The DHL Network

Text: 4 Adrian Dalsey, Larry Hillblom, and Robert Lynn formed DHL Corporation (DHL), a package delivery company, in California in 1969. Document Handling Limited, International (DHLI), was incorporated in Hong Kong in 1972. Generally, independent local agents conducted the international operations and paid a network fee to DHLI. Middleston, N.V. (MNV), incorporated in 1979, owned most of the overseas local operating companies. At trial before the tax court, DHL conceded that, because of overlapping stock ownership, common control existed among DHL, DHLI, and MNV for all relevant times up to December 7, 1990. 5 From 1972 to 1992, DHL and DHLI/MNV were part of a global network in which DHL handled United States operations exclusively and DHLI/MNV handled foreign operations. DHL delivered DHLI's America-bound shipments, and DHLI delivered DHL's foreign-bound shipments. Until 1987, each company kept for itself the full amount paid by the local customer, and the companies did not exchange fees. Each company also paid for its own advertising expenses in its respective markets. A network steering committee, a specially formed corporation, and other mechanisms coordinated the worldwide DHL network. In 1988, a Worldwide Coordination Center was established in Belgium, with the world operations of the DHL network divided into three regions, each with its own CEO. DHL struggled in the competitive American market, sustaining losses during the 1980s, but DHLI/MNV expanded rapidly and profitably.