UPS, Fedex Face
Antitrust Court Date Over Price Fixing, Collusion Charges
By Mike Mitchell
January 19, 2012 - In a positive move forward for parcel
shippers and their consultants, defendants United Parcel
Service Co. (UPS) and FedEx Corporation (FedEx) have
answered a complaint alleging antitrust violations filed
by AFMS LLC. In addition, the parties have agreed to a
trial date, pending court approval, of June 18, 2013.
AFMS is an independent transportation consultant
specializing in small package contract negotiations.
"We are obviously pleased that our case will be proceeding forward,? said Mike Erickson, founder and president of AFMS. ?By severely restricting dealings with third-party consultants, UPS and FedEx are unfairly preventing shippers from accessing valuable knowledge and information that can make a significant impact on their contract negotiations and, ultimately, on their bottom lines".
strongly believe in the claims made in our complaint and are
encouraged by the defendants? decision not to challenge our
complaint claims that at an industry event in October 2009,
executives from UPS and FedEx announced policies of no longer
dealing with third-party consultants. This news was followed by
internal memos from UPS and FedEx, which were circulated within
hours of each other on April 23, 2010. Both memos defined new
and highly restrictive policies regarding third-party shipping
believe that the no third-party shipping consultant policies
implemented by UPS and FedEx violate the Sherman Antitrust Act,
and we have alleged in our complaint that both defendants have
unreasonably restrained trade, increased prices and wrongfully
driven competing consultants from the market,? stated Maxwell M.
Blecher, founding partner of Blecher & Collins P.C. , the law
firm representing AFMS. ?As a result of the defendants? conduct,
our client AFMS, other third-party consultants and shippers in
general have all been injured.?
In addition to the
complaint filed by AFMS, the controversial no third-party consultant
policies have also attracted the attention of the Antitrust Division of
the U.S. Department of Justice. It has been reported that several months
ago the department notified UPS and FedEx of a preliminary investigation
regarding their dealings with third-party consultants, and UPS has
stated publicly that it is cooperating with the department?s inquiries.
According to a
2006 Morgan Stanley Transportation Industry Report cited by AFMS in its
complaint, 11 percent of shippers used a third-party consultant, and
shippers who used third-party consultants enjoyed discounts that were 49
percent better than those that were obtained by negotiating directly
with UPS and FedEx. The third-party shipping consultant industry, prior
to the defendants? institution of the no third-party shipping consultant
policy, comprised approximately 50 firms, with services ranging from
contract negotiations to warehousing and inventory control.
AFMS, have vast experience in the shipping industry and can provide
customers with valuable knowledge about shipping methods, pricing and
fee structures. For many shippers, third-party consultants provide
experience and oversight that translates into significant value. AFMS
estimates that from 2007 to 2009 it saved its clients more than $100
million in shipping dealings with UPS and FedEx.
According to AFMS founder and president Erickson, ?Our diverse group of U.S. clients relies on us to help deliver bottom-line savings. With transportation costs often representing five to 10 percent of total operating costs, our clients depend on us to help make American goods and services more competitive in the global marketplace.?
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