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GameFly Gets Favorable Ruling In Postal Service 'Discrimination' Case

GameFly Gets Favorable Ruling In Postal Service 'Discrimination' Case

April 21, 2011 | By Frank Cifaldi

The Postal Regulatory Commission has ruled in favor of games-by-mail service GameFly following its discrimination claims against the United States Postal Service (USPS), and has given the USPS 60 days to set up new rates for round-trip DVD mailpieces, according to a report on Post & Parcel.

According to the original complaint, the USPS manually sorted discs from Netflix and Blockbuster without charging either company an additional manual sorting fee. Manual sorting is necessary for services such as these, as discs are frequently damaged in the USPS automated processing machines.

GameFly claimed that it was frequently denied requests for a special round-trip disc rate, and that the USPS was discriminating against the company by not offering the same rates given to its competition.

According to GameFly CEO David Hodess, the difference between the two-ounce flat rate of $1.05 that the company was forced to pay to avoid extensive disc damage and the 44 cents that Netflix pays amounts to around $730,000 a month, "more than 100 percent of GameFly's monthly net income in 2011."

"The Commission concludes that the Postal Service has unduly discriminated against GameFly," said the Commission in its ruling. "Netflix and Blockbuster have been given a number of preferences, including various forms of manual processing coupled with the avoidance of the non-machinable surcharge."

The Commissioner dismissed testimonies from the USPS claiming that the decision to manually sort Blockbuster and Netflix's distinctive envelopes was made by local processing units to avoid costly machine jamming, saying that there was "no credible evidence" to support these claims.

Wednesday's ruling comes just three days shy of two years since the case was brought before the Commission.

The USPS has the opportunity to appeal the decision in a court of law, though refused to comment on whether this may happen, with USPS lawyers saying only that such a move was "under consideration."

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