Appeals Court Rejects Challenge to Valassis-USPS Deal

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Incentive discounts hold for Valassis mailers.
Incentive discounts hold for Valassis mailers.

The United States Court of Appeals for the DC Circuit today denied a petition filed by the Newspaper Association of America (NAA) that challenged the U.S. Postal Service's right to offer Valassis discounted rates on incremental mail volume.

In 2012 the Postal Service entered into a negotiated service agreement (NSA) with Valassis that promised it discounts on mail volume that exceeded its volume from the previous year. In April 2012 Valpak complained to the Postal Regulatory Commission (PRC) that the agreement was the result of “unlawful delegation” by the Postal Board of Governors, which had pre-approved USPS's right to enter into such agreements.

The NAA subsequently filed a petition contending that USPS's role as a government-protected monopoly forbids it from engaging in special deals that made for unfair competition in the marketplace.  Newspapers fear special pricing for Valassis might hurt their Sunday freestanding insert business. But the Appeals Court today disagreed, ruling that the PRC's order was in keeping with the Postal Accountability and Enhancement Act and the Administrative Procedure Act.

“We're very disappointed that the court has given its usual deference to federal agency experts,” says Paul Boyle, the NAA's SVP of public policy. “Its decision said that the PRC did not analyze the NSA's impact on competition, but that the law is ambiguous on whether they need to do this.  We'd be curious to see where [NSAs] have produced tangible benefits for the Postal Service.”

The Direct Marketing Association, meanwhile, applauded the decision. “We think it's a good thing the Postal Service is trying innovative ways to increase their volume and put more effort into growing their business instead of raising their rates,” says Jerry Cerasale, DMA's SVP of government affairs.

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