In microfluidic devices the fluid can be manipulated either as continuous streams or droplets. The latter is particularly attractive as individual droplets can not only move but also split and fuse, thus offering great flexibility for applications such as laboratory-on-a-chip. We consider the transport of liquid drops immersed in a surrounding liquid by means of the dielectrophoretic force generated by electrodes mounted at the bottom of a microdevice. The direct numerical simulation (DNS) approach is used to study the motion of droplets subjected to both hydrodynamic and electrostatic forces. Our technique is based on a finite element scheme using the fundamental equations of motion for both the droplets and surrounding fluid. The interface is tracked by the level set method and the electrostatic forces are computed using the Maxwell stress tensor. The DNS results show that the droplets move, and deform, under the action of nonuniform electric stresses on their surfaces. The deformation increases as the drop moves closer to the electrodes. The extent to which the isolated drops deform depends on the electric Weber number. When the electric Weber number is small, the drops remain spherical; otherwise, the drops stretch. Two droplets, however, that are sufficiently close to each other, can deform and coalesce, even if the electric Weber number is small. This phenomenon does not rely on the magnitude of the electric stresses generated by the bulk electric field, but instead is due to the attractive electrostatic drop-drop interaction overcoming the surface tension force. Experimental results are also presented and found to be in agreement with the DNS results.