FedEx “cooperating” with federal antitrust investigation

FedEx Corporation insisted today it has not engaged in anti-competitive activities, as it confirmed that it is involved in a full federal antitrust investigation, along with UPS. In its latest quarterly report to the US Securities and Exchange Commission, the corporation confirmed that the preliminary inquiries launched by the US Department of Justice last November has now become a full civil investigation.

The Department’s Antitrust Division is looking into the policies and practices of FedEx and United Parcel Service, Inc., with regard to relationships with third-party shipping consultants.

FedEx confirmed that federal officials asked for demanded that the company provide information and documents on connection with the investigation, and that it is cooperating with the investigators.

The federal investigation was prompted by the filing last summer of a civil antitrust lawsuit by shipping consultancy AFMS, of Portland, Oregon.

The case relates to the decision by FedEx, and also UPS, to persuade customers not to work with shipping consultants in order to seek lower shipping rates.

FedEx and UPS argue that their own sales are in the best positions to decide which service would suit a customer best, and that dealing directly with their sales teams, customers would not have to pay a shipping consultant a cut of the fees.

Shipping consultants contend that their fees are usually based on savings achieved.

But as well as accusing FedEx and UPS of having raised their shipping rates in “lock-step” with each other for years, the shipping consultants AFMS said in their filing with the US District Court, Central California, that FedEx and UPS had both announced their change of policy on shipping consultants at the same time.

In particular, they point to a single industry conference when both shipping companies announced their policy on the same stage, along with memos issued to staff by both companies on the same day in April 2010 – memos detailing their policies on third party consultants.

In its filing today, FedEx noted that it was involved the separate litigation related to the antitrust issue.

But, concerning the Department of Justice investigation, the Memphis-based company said: “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.”