UPS and FedEx Investigated for Price Fixing

In the March 18, 2011, 10-Q Quarterly Filing by FedEx Corporation is a brief reference to a U.S. Department of Justice investigation into alleged anti-competitive actions:

  • In February 2011, we received a demand for the production of information and documents in connection with a civil investigation by the Antitrust Division of the U.S. Department of Justice into the policies and practices of FedEx and United Parcel Service, Inc., for dealing with third-party consultants who work with shipping customers to negotiate lower rates. We are also engaged in related litigation with one of these third-party pricing consultants. We do not believe that we have engaged in any anti-competitive activities, and we are cooperating with this investigation and vigorously defending against the litigation.

Both UPS and FedEx are excellent organizations and are extremely profitable. It seems that these carriers have taken notice of the organizations that help their customers reduce their transportation expenses.

At Silverback we regularly help our clients reduce their transportation costs. Many times, the changes we implement are small changes that have more to do with helping our client understand why they pay $8.00 for this or $11.00 for that. We simply educate the customer about how to avoid paying that extra fee in the future.

More than once, I have attended a meeting with our client and the carrier and listened to the carrier explain how they (the carrier) have the client’s best interest at heart. The carrier generally goes on to tell the client that they do not need our (Silverback) help because they (the carrier) are already helping them.

Isn’t this the fox guarding the hen house? As a consumer, you have every right in the world to enlist someone to help. All vendors are willing to help, but they have no incentive to decrease their sales in order to increase your bottom line.

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