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House of Reps Investigate USPS for Possible Unlawful Activity

Two republicans on the House of Representatives Committee on Oversight and Government Reform sent a letter to the US Postmaster General demanding she turn over details about the agency’s competitive products operations.

In a letter dated May 13, 2015, republican representatives Jason Chaffetz and Mark Meadows demanded Postmaster General Brennan provide the committee with a long laundry list of detailed data, including information about Sunday package deliveries, which is being fueled through a partnership with Amazon.

The US Postal Service is increasingly competing against private industry as the package side of its business grows and mail business shrinks.

This EcommerceBytes article from August explains why lawmakers may be looking at the issue now. When the Postal Service lowered commercial rates for Priority Mail packages last year, UPS and FedEx complained to the Postal Regulatory Commission, claiming the USPS held unfair advantages over them.

Criticism has also come from the Taxpayers Protection Alliance, which is opposed to what it calls “costly business ventures and private-market abuse” by the USPS.

It’s not clear if lawmakers were lobbied to conduct the investigation. The Postal Service has been anything but subtle as it goes after UPS and FedEx business. Its boldest campaign to date has been an ad that compares its Priority Mail service against the more expensive dim weight ground rates put into place by UPS and FedEx in 2015. It also encourages online shoppers to use the USPS when returning goods to online merchants.

Its cozy relationship with ecommerce giant Amazon must also be frustrating for other shipping carriers that may feel unfairly shut out.

While it is lawful for the Postal Service to offer competitive services, its market dominant services can’t subsidize them, and that’s what’s at the center of the investigation.

The USPS is required to abide by what the two representatives called in their letter “the necessarily complicated legal framework” to ensure compliance with the “statutory prohibition on cross-subsidization of competitive products by market-dominant products and revenue.”

In other words, they want to make sure the monopoly side of the USPS business isn’t helping to pay for services that compete with the likes of FedEx and UPS.

“Opportunities for unlawful cross-subsidization exist in a number of areas. In fact, some of the Postal Service’s actions and public statements have heightened the Committee’s concerns about cross-subsidization,” according to Representatives Chaffetz and Meadows.

If the USPS is forced to raise prices on competitive services – Priority Mail in particular – it could have a major impact on online sellers.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.