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“India Investigates DHL, FedEx, UPS for Suspected Antitrust Violations”

The Entrepreneur Bytes Team January 6, 2024 290

"India's Antitrust Watchdog Probes Global Delivery Giants DHL, FedEx, and UPS for Alleged Collusion Practices"

India’s Competition Commission is currently delving into the operations of major global delivery companies, including DHL from Germany, United Parcel Service (UPS) based in the U.S., and FedEx. The investigation centers around allegations of antitrust practices, specifically pertaining to collusion on tariffs and discounts, as revealed in documents obtained by Reuters.

The scrutiny of these logistics giants isn’t entirely novel. Some aspects of this investigation stretch back to 2015 when France imposed significant fines amounting to $735 million on 20 companies, including FedEx and DHL, for clandestine collaboration aimed at inflating prices. The recent focus of India’s Competition Commission has involved a meticulous review of hundreds of thousands of emails, an effort initiated in October 2022.

This inquiry was prompted by complaints lodged by the Federation of Indian Publishers, alleging coordinated pricing decisions and control over customer discounts among DHL, FedEx, UPS, Dubai’s Aramex, and certain domestic companies.

Should these claims be substantiated, they would constitute a violation of Indian antitrust laws. Documents suggest that executives of these companies exchanged sensitive information on volumes, charges, and discounts related to courier and storage services provided at airports, leading to joint decisions on rates.

In an initial assessment that triggered the broader investigation, the Competition Commission highlighted the potential sharing of commercially sensitive data among these companies for arriving at unified tariff decisions.

While the antitrust watchdog has refrained from commenting on these allegations, FedEx firmly refuted the accusations in the complaint. They emphasized their cooperation with the investigation and reiterated their commitment to legal compliance. DHL also expressed full cooperation and emphasized its adherence to legal standards, while UPS refrained from divulging specifics but assured cooperation with the investigation.

Aramex and the Indian complainant remained silent on Reuters’ queries.

The probe’s details are exclusive to Reuters, as the Competition Commission maintains confidentiality regarding antitrust cases involving price collusion and cartel activities.

If the investigation confirms cartelization, the implicated companies could face fines equivalent to three times the annual profit during the period of fee-fixing or 10% of the annual revenue for each violation year, whichever is higher.

The burgeoning e-commerce landscape in India has intensified the demand for courier services, expected to grow at a robust 17% annually, reaching an estimated $18.3 billion by 2029. As a result, major players like DHL and FedEx have announced substantial investments and expansions in the country.

Investigators are poring over the evidence submitted by the companies under scrutiny, seeking an extension until March to thoroughly analyze the material before compiling an internal report. The watchdog’s review also highlighted the alleged coordination among companies in fixing charges for airport services, with these decisions becoming obligatory for all involved in the purported pact.

The complainant group further accused certain companies of maintaining a fuel surcharge despite reduced fuel prices during COVID-19 travel restrictions, hinting at coordinated actions or collusion among the accused entities.

The investigation remains ongoing as India’s Competition Commission diligently examines the evidence, scrutinizing potential antitrust violations within the domain of global courier services.

Sources By Agencies