Appeals court panel denies AFMS bid to rehear parcel antitrust decision

A leading parcel consultancy's seven-and-a-half-year quest to prove that UPS Inc. and FedEx Corp. violated federal antitrust laws by boycotting its business has been akin to pushing a legal rock uphill. Yesterday, the rock may have crashed down for good.

A three-judge panel of the 9th U.S. Circuit Court of Appeals declined AFMS LLC's request to rehear its decision last August finding in favor of Atlanta-based UPS and Memphis-based FedEx that neither engaged in anti-competitive behavior by excluding AFMS from contract negotiations on behalf of its shipper customers and working directly with the shippers themselves.

The panel noted in yesterday's decision that none of the other circuit judges requested a vote on a rehearing before the full court. The news of yesterday's decision was first reported on Competition Law360, a legal web site.

Portland, Ore.-based AFMS, one of the oldest parcel consultants, vowed to take its case up the judicial ladder after a federal district court in May 2015 threw out its motion against FedEx and UPS. The district court ruled that AFMS' claim had no standing on antitrust grounds because it was not a shipper but a consultant that didn't ship parcels. Because of that, AFMS could not have suffered harm due to the carriers' allegedly anticompetitive behavior, the court ruled. As such, the court found that AFMS failed to demonstrate a "relevant market" for services that could have been discriminated against.

In its August's ruling, a divided appellate panel relied on the lower court's reasoning. However, Judge Stephen Reinhardt dissented, saying AFMS may have made a persuasive case for the "existence of a market regarding shipping consultation services, rate negotiations, and/or a combination of the two."

AFMS did not respond to an e-mailed request for comment on yesterday's decision.

The legal battle dates back to August 2010, when AFMS sued the carriers on grounds they colluded to boycott third-party consultants who negotiated rate discounts on behalf of their shipper clients. AFMS also alleged that FedEx and UPS threatened shippers who continued to use intermediaries with the loss of their rate discounts. AFMS said the carriers' actions destroyed the ability of consultants to compete in the marketplace, and that many suffered severe drops in revenue and income stemming from the carriers' strategies.

UPS and FedEx had argued that it was legal to work directly with shippers. The carriers said that they were not deliberately excluding consultants but that they would work—or not work—with consultants at the carriers' discretion.

AFMS had a mostly amicable 17-year relationship with FedEx and UPS until early 2010, when the carriers terminated their agreements with AFMS and began dealing directly with its shipper clients. In October 2009, the carriers announced changes in their relationships with all consultants. The changes effectively led to a boycott of intermediaries that focused on rate negotiations.

Since then, many consultants have continued to advise shippers on pricing tactics. However, they work behind the scenes rather than appearing at the negotiating table.