The country’s antitrust body, the Competition Commission of India (CCI), is investigating domestic units of global delivery firms, such as Germany’s DHL, the US’s United Parcel Service and FedEx, for alleged collusion over discounts and prices, said a report released Friday.
It is the latest such investigation targeting the logistics sector, with some dating back to 2015, when France imposed fines totaling $735 million on 20 companies, including FedEx and DHL, for secret collusion with a view to increasing prices.
In recent weeks, the ICC began reviewing hundreds of thousands of emails as part of its investigation into fees charged by companies for airport services, Reuters reported citing government documents and citing three sources.
The CCI investigation began in October 2022 after the Federation of Indian Publishers complained that DHL, FedEx, UPS and Dubai’s Aramex, as well as some domestic companies, were jointly deciding rates and controlling discounts given to customers.
Such actions, if proven, violate Indian antitrust laws.
The publisher said company executives exchanged commercially sensitive information regarding volumes, fees and discounts on courier and storage services offered at airports, before deciding on rates, the documents show.
They “appear to share commercially sensitive information with each other…to make a joint or collective decision to arrive at tariffs,” the CCI said in an initial assessment that led to a wider investigation.
In a statement, FedEx categorically denied the accusations contained in the complaint, but told Reuters that it was cooperating with the ICC, while adding that it was committed to respecting the law. DHL also said it was fully cooperating and still maintaining its legal compliance.
UPS said it could not provide details about « an ongoing non-public investigation » but was cooperating with the watchdog.
A finding of cartelization could result in a fine of up to three times the profit for each year in which the fees were set by the companies, or 10% of annual turnover for each year of violation, the amount the highest being retained.
E-COMMERCE BOOM INCREASES DEMAND
Many companies are optimistic about the prospects for a market for courier, express and parcel delivery services that is expected to grow 17% annually to reach $18.3 billion by 2029, as the The rise of e-commerce is fueling demand, according to research firm Mordor Intelligence.
In 2022, DHL announced it would invest $547 million to expand its warehouses and workforce in India, which it considers a priority market. Last month, a unit of FedEx invested $100 million to create a technology and digital innovation center.
Most of the companies under investigation sent emails to the watchdog in response to notifications sent after identifying key executives involved in the alleged misconduct, the documents show.
Investigators have asked for more time, until March, to study all the evidence, before preparing an internal report.
The watchdog’s 2022 review showed that charges for courier companies’ airport services were decided in meetings, before being made « obligatory » for all participants in a pact, the documents showed.
The plaintiff group also alleged that some companies set a fuel surcharge of 17 to 22 percent, citing rising fuel prices, but did not subsequently reduce them when those prices fell during COVID-19 travel restrictions. the COVID-19 pandemic.
“Such conduct appears to emanate from coordination or collusion,” the CCI said in a document.
With contributions from Reuters
