Tuesday, January 15, 2013

Price Discrimination by USPS Deemed Illegal

A US Court of Appeals has ruled that the US Postal Service may not price discriminate in the handling of DVDs in the mail. Since the regular automated sorting process would damage DVDs, they must be hand sorted. This usually incurs an additional fee but the USPS exempted Netflix. A competitor, Gamefly, sued because it was not getting the same treatment. So why would the USPS want to treat these two companies differently?
Presumably the post office came to this conclusion after considering the costs and the volume that Netflix delivers, Peter S. Vogel, partner with Gardere Wynne Sewell, told the E-Commerce Times.

So it may not be price discrimination at all.

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