Catalog group responds to Greco letter

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The executive director of the American Catalog Mailers Association sent a letter to John A. Greco Jr., president/CEO of the Direct Marketing Association, regarding a message he sent to members that criticized some mailers during recent postal rate case proceedings.

In the May 11 message, Mr. Greco discussed the 20 percent to 40 percent rate increases that catalogers were facing. He also had said that the Coalition of Catalog Mailers - an ad hoc coalition of mailers formed to participate in the rate case - filed a motion with the Postal Regulatory Commission to reopen the rate case record, which immediately stopped all reconsideration for Standard Mail flats rates. He went on to say that the motion was filed without any discussion with or in consideration of other mailer associations such as the DMA, and that the CCM asked the PRC to give catalogers time to adjust to the high rates rather than the more desirable action of lowering the high rates.

"Members of ACMA and all other catalog mailers recognize and appreciate the many contributions of DMA over the years to the advancement of all Standard Mail mailers," said Hamilton Davison, in the May 17 letter. "Nonetheless, I regret to say that your letter of May 11, 2007, to all DMA members contains material inaccuracies with respect to ACMA's efforts in the reconsideration of Standard Mail flats rates in PRC Docket R2006-1."

The ACMA (www.catalogmailers.org) is a Washington-based group that represents the catalog industry in regulatory, legislative, commercial and administrative matters. It currently has more than 35 members, including catalogers Cuddledown and Northern Safety and suppliers infoUSA, and MeritDirect. ACMA had joined the ad hoc group's pleadings with the PRC. The CCM is no longer in existence.

In the letter, Mr. Davison said that some catalogers have expressed to the ACMA their view that the DMA cannot effectively represent the interests of the catalog industry in all circumstances.

"In the course of the recent rate case, most catalogers relied on DMA to inform them and protect their interests," he said. "Unlike many other groups within DMA, catalogers do not have specialized associations representing their interests before the PRC. Despite this reliance on DMA, there was no "call to action" to warn catalogers that 20 to 40 percent rate increases for flats, far higher increases than those proposed by the Postal Service, were becoming a real possibility."

Mr. Davison said the DMA did not solicit testimony from catalogers to oppose such drastic rate increases.

The PRC subsequently held that catalogers had sufficient notice of the 20 percent to 40 percent rate increases to file rebuttal testimony because their trade association participated in the rate case proceeding.

The letter said, "when the Postal Service Governors requested reconsideration of Standard Mail flats rates, they stated that 'it is especially important to hear the views of Standard Mail mailers whose rates would be affected.' "

In its Order No. 8, the PRC explicitly cautioned that "[a]necdotal comments unconnected to the record, particularly from persons not parties to the proceeding, are problematic and cannot be relied on by the Commission in resolving issues raised on reconsideration."

In other words, for catalogers to simply write letters to the PRC was legally irrelevant.

"Based on these statements, catalogers concluded that they should at least offer the Commission an opportunity to take additional evidence on the discrete issue of the impact of the much-higher-than proposed rate increases for flats. We calculated, correctly in our view, that denial of a motion to reopen the record would result in only a minor delay whereas a grant of the motion would indicate that the PRC considered further evidence necessary to resolve the issues in favor of catalogers. Either way the plight of the catalogers would be highlighted to the Commission. We believe the very future of some catalog companies is put in jeopardy by the R2006-1 decision - any lesser response would have failed to adequately represent the interests of our industry."

Mr. Davison said that to suggest that the CCM's strategy "undermined DMA's efforts to protect catalog mailers is unreasonable and unwarranted. There is no way to know whether the PRC would have granted the Postal Service's request for reconsideration without catalogers speaking up. Indeed, DMA has opposed the Postal Service's proposed rebalancing of Standard Mail letters and flats rates, a position that makes significant rate relief for the catalogers less likely, rather than more likely. At the same time, DMA has requested the Governors delay rate increases for all Standard Mail, a request that will be very difficult for the Governors to accept because it would mean forgoing additional revenues on all Standard Mail. If, as you suggest, DMA believes "strongly and very vocally that Standard flats rates should be lowered," DMA could have focused its request for delay on flats rates only."

Furthermore, Mr. Davison said, "your letter represents that "CCM asked the PRC to give catalogers time to adjust to the high rates rather than the more desirable action of lowering the high rates."

Actually, CCM repeatedly and strongly advocated in its pleadings that the Commission should "revise its recommended rates for Standard Mail flats to allow a reasonable transition to shape-based rates."

"You have suggested that DMA's strategy for its letters members and flats members is one of unity," he said. "Catalog mailers will enthusiastically support a unified approach towards public policies that commonly affect all standard mailers. However, we note that many large members of DMA use specialized trade associations to advocate their distinct interests in postal affairs when those interests differ from the common interests of all direct mailers.

"Acting through associations such as the Financial Service Roundtable and the American Banking Association, many members of DMA have opposed the proposed rate relief for flats because they feel the outcome may adversely affect their commercial interests. We certainly do not question their right to defend their interests in this manner, but we believe that catalogers must have the same right."

"In the future, we will seek a collaborative and collegial working relationship with DMA," Mr. Davison said. "Like other members of DMA, we must reserve the right to respectfully disagree where DMA's broader membership makes it difficult to advocate for catalog interests specifically. It may be helpful for DMA to clarify its rules about such matters for the future. We look forward to collaborating on common interests."

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