Sandy Springs-based UPS and its major competitor, FedEx, said they are being investigated by the U.S. Department of Justice following a claim of collusion in a lawsuit filed in California.
The suit, filed in U.S. District Court in California's central district, claims the two companies worked together to disallow third parties from negotiating shipping rates for customers. Both companies said they prefer to work with their customers on a one-on-one basis.
A spokeswoman for the Department of Justice said she could not confirm the inquiry, but UPS spokeswoman Susan Rosenberg said the company was first contacted in November. The lawsuit was filed in August.
"The notion we conspired ... I think is pretty outrageous, considering how aggressively we compete against each other," Rosenberg said.
She said UPS has a right to refuse to work with third parties, and does so because the company believes it "ultimately adds to the cost of shipping."
"They're punishing UPS for dealing with their own customers," she said.
AFMS, the Portland, Ore., consulting company that filed the suit, said in it that shippers that use consultants tend to save more, and that eliminating those savings would "substantially increase UPS/FedEx revenues and profits" and therefore be a form of price-fixing. No one from AFMS returned a phone call seeking comment about the case.
Jerry Hempstead, a consultant with Hempstead Consulting in Florida, said he does not believe the two companies coordinated their decisions, though many of his colleagues do. Hempstead said the timing of the changes is suspect because both companies came out with new policies at the same time.
Both UPS and FedEx filed motions with the court to dismiss the suit. FedEx spokesman Jim McCluskey said while FedEx respects a customer's choice to retain third-party firms, the company believes its sales members are the best qualified to provide services.
FedEx has strengthened its non-disclosure agreements when dealing with third parties, which it will only do under certain circumstances, McCluskey said.
Hempstead said such agreements are particularly onerous, and scare third parties away from both companies.
About the Author
Keep Reading
The Latest
Featured