Commission ruling: U.S. Postal Service treated GameFly unfairly

GameFly has argued for the past two years that its been the victim of unfair postal rates. The company believed it wasn’t receiving the same sweet deal extended to Netflix and Blockbuster by the United States Postal Service, and as a result was spending much more on shipping each month — $730,000 more to be exact.

A regulatory commission which oversees the USPS agreed this week, ordering changes to better standardize rates for such companies in the future.

The Postal Regulatory Commission’s “Order No. 718” found that GameFly had indeed suffered from improper treatment at the hands on the USPS.

“Upon consideration of the evidentiary record and the arguments made in the initial and reply briefs of the parties, the Commission concludes that the Postal Service has unduly discriminated against GameFly in violation of 39 U.S.C. 403(c),” reads the executive summary.

That’s not to say the USPS didn’t defend its stance.

The organization originally argued that the higher cost of video games combined with a greater-than-average theft risk played a part in the excess costs associated with shipping them, noting that Netflix only mailed movies which are significantly less expensive.

The commission, however, didn’t bite.

“For those differences to be relevant, it would be necessary for the Postal Service to demonstrate either that the cost differences between game discs and video discs impact Postal Service costs or operations or that those cost differences are responsible for GameFly’s choice of flats service as opposedto letter service as chosen by Netflix and Blockbuster,” the group found.

The ruling isn’t necessarily a blow to Netflix or other snail mail movie renters; just a boon for GameFly. The game rental service was previously accused by Netflix of wanting “special treatment” — after GameFly pointed out that that was exactly what Netflix and Blockbuster enjoyed. Considering the two aren’t exactly competitors, the fracas perplexed many.

Commissioner Tony Hammond admitted that he concurred “reluctantly” to the majority opinion, fearing misinterpretation. Nonetheless, Hammond opined, “The Postal Service offered multiple defenses, many of which struck me as, at best, strained.”

The group’s decision was bookended by a recommendation that must be implemented within 60 days.

“The Commission finds that the appropriate remedy is for the Postal Service to offer a reduced rate for round-trip flat-shaped DVD mailers weighing up to two ounces. The rate is designed to ameliorate the disparate treatment in the Postal Service’s current application of the rate schedule to Netflix’s and GameFly’s mailpiece designs.”

Furthermore, GameFly will now enjoy the same rate relief that helped Netflix avoid additional costs associated with automation letter equipment. Two parallel rates will be implemented around First Class Mail shipping to ameliorate the issue. (Via Postal News Blog)

What do you think about the end of this two-year squabble? Let us know if the comment section.