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Exclusive-India probes DHL, FedEx, UPS for alleged antitrust practices, price collusion

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Published Jan 05, 2024 02:58AM ET Updated Jan 05, 2024 04:51PM ET

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Exclusive-India probes DHL, FedEx, UPS for alleged antitrust practices, price collusion © Reuters. UPS logo and Indian flag are seen in this illustration taken, January 4, 2024. REUTERS/Dado Ruvic/Illustration

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By Aditya Kalra

NEW DELHI (Reuters) – India’s antitrust body is investigating domestic units of global delivery companies, such as Germany’s DHL, U.S.-based United Parcel Service (NYSE:) and FedEx (NYSE:), for alleged collusion on discounts and tariffs, documents seen by Reuters showed.

It is the latest such scrutiny for the logistics industry, some dating back to 2015, when France levied fines amounting to $735 million on 20 companies, including FedEx and DHL, for secretly colluding to increase prices.

In recent weeks, the Competition Commission of India (CCI) has begun reviewing hundreds of thousands of emails as it investigates the fees companies charged for airport services, according to government documents and three sources.

Its inquiry began in Oct. 2022 after the Federation of Indian Publishers complained that DHL, FedEx, UPS and Dubai’s Aramex, along with some domestic firms, were deciding charges together and controlling customer discounts.

Such actions, if proved, violate Indian antitrust laws.

The publisher said company executives exchanged commercially sensitive information regarding volumes, charges and discounts on courier and storage services offered at airports, before deciding on rates, the documents stated.

They “appear to be sharing commercially sensitive information amongst themselves … for taking joint or collective decision to arrive at tariffs”, the CCI said in an early assessment that led to the broader inquiry.

The antitrust watchdog did not respond to a request from Reuters seeking comment.

In a statement, FedEx categorically denied the accusations in the complaint but told Reuters it was co-operating with the CCI, while adding that it was committed to legal compliance. DHL also said it was co-operating fully and always maintained legal compliance.

UPS said it could not give details of an “an ongoing, non-public investigation” but was co-operating with the watchdog.

Aramex and the Indian complainant did not respond to Reuters queries.

Reuters is first to report the details of the investigation. The watchdog keeps confidential details of antitrust cases involving accusations of price collusion and cartel actions.

A finding of cartelisation could bring a fine of up to three times the profit in each year the fee was fixed by the companies, or 10% of annual revenue for each year of violation, whichever is greater.

E-COMMERCE BOOM BOOSTS DEMAND

Many companies are bullish about prospects in a market for courier, express and parcel delivery services expected to grow 17% each year to reach $18.3 billion by 2029, as an e-commerce boom fuels demand, says research firm Mordor Intelligence.

In 2022, DHL said it would invest $547 million to expand its warehousing and workforce in India, which it called a priority market. Last month, a FedEx unit invested $100 million to set up a technology and digital innovation centre.

Most companies being investigated submitted emails to the watchdog in response to notices sent after it identified key executives involved in the alleged misconduct, the documents showed.

Investigators have sought more time, until March, to study all the evidence, before preparing an internal report.

The watchdog’s 2022 review showed that charges for airport services by courier companies were decided at meetings, before being made “mandatory” for all participants in a pact, the documents showed.

The complainant group also alleged that some companies set a fuel surcharge of 17% to 22%, citing rising prices of fuel, but did not cut them subsequently when those prices eased, during the travels curbs surrounding the COVID-19 pandemic.

“Such conduct appears to emanate out of coordination or collusion,” the CCI said in one document.

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