India probes global delivery giants for alleged collusion on discounts

09 Jan 2024 CW Team

The Competition Commission of India (CCI) has initiated a review, examining a vast number of emails to investigate fees charged by companies for airport services. The inquiry, which commenced in October 2022, was triggered by a complaint from the Federation of Indian Publishers alleging that DHL, FedEx, UPS, and Dubai's Aramex, along with some domestic firms, were collectively determining charges and controlling customer discounts. Such actions, if proven, would violate Indian antitrust laws.

According to documents, the publishers claimed that executives exchanged commercially sensitive information related to volumes, charges, and discounts on courier and storage services at airports before determining rates. The CCI, in its preliminary assessment leading to the broader inquiry, stated that there was apparent sharing of commercially sensitive information among the companies for joint decision-making on tariffs.

While the antitrust watchdog did not respond to Reuters' request for comment, FedEx denied the allegations in the complaint but asserted its cooperation with the CCI, emphasising its commitment to legal compliance. DHL also stated full cooperation and adherence to legal standards, while UPS, unable to provide details on an ongoing investigation, confirmed cooperation with the regulatory body.

If proven guilty of cartelisation, the companies could face fines up to three times the profit for each year the fee was fixed or 10% of annual revenue for each year of violation, whichever is greater. The courier and parcel delivery services market is anticipated to grow significantly, with many companies optimistic about its prospects, driven by a 17% annual growth rate expected to reach $18.3 billion by 2029, fuelled by the e-commerce boom.

India's competition regulator is currently scrutinising the local branches of global delivery giants, including Germany's DHL, US based United Parcel Service (UPS), and FedEx, over suspected collusion on discounts and tariffs, according to documents reviewed by Reuters. This investigation is part of a broader trend in the logistics industry facing regulatory scrutiny, with some cases dating back to 2015 when France imposed fines totalling $735 million on companies, including FedEx and DHL, for clandestine collaboration to raise prices. The Competition Commission of India (CCI) has initiated a review, examining a vast number of emails to investigate fees charged by companies for airport services. The inquiry, which commenced in October 2022, was triggered by a complaint from the Federation of Indian Publishers alleging that DHL, FedEx, UPS, and Dubai's Aramex, along with some domestic firms, were collectively determining charges and controlling customer discounts. Such actions, if proven, would violate Indian antitrust laws. According to documents, the publishers claimed that executives exchanged commercially sensitive information related to volumes, charges, and discounts on courier and storage services at airports before determining rates. The CCI, in its preliminary assessment leading to the broader inquiry, stated that there was apparent sharing of commercially sensitive information among the companies for joint decision-making on tariffs. While the antitrust watchdog did not respond to Reuters' request for comment, FedEx denied the allegations in the complaint but asserted its cooperation with the CCI, emphasising its commitment to legal compliance. DHL also stated full cooperation and adherence to legal standards, while UPS, unable to provide details on an ongoing investigation, confirmed cooperation with the regulatory body. If proven guilty of cartelisation, the companies could face fines up to three times the profit for each year the fee was fixed or 10% of annual revenue for each year of violation, whichever is greater. The courier and parcel delivery services market is anticipated to grow significantly, with many companies optimistic about its prospects, driven by a 17% annual growth rate expected to reach $18.3 billion by 2029, fuelled by the e-commerce boom.

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