Gamefly files postal discrimination complaint

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Online video game rental company Gamefly has filed a complaint against the US Postal Service claiming discriminatory practices against it.

The complaint, filed with the Postal Regulatory Commission, alleges that the Postal Service unduly discriminated against Gamefly.

According to the complaint, Gamefly video game DVDs break or become damaged at about a 2% rate when going through the postal system.

In an effort to stem this, the company asked the USPS to manually sort the discs instead of using an automated sorting system that has a tendency to damage discs.

Gamefly contends that the USPS provides this manual sorting for larger mailers of DVDs, such as Netflix and Blockbuster, but refused to do so for Gamefly.

“Until recently, none of the larger-volume DVD rental companies offered video games,” reads a portion of the complaint. “On February 11, 2009, however, Blockbuster, which hitherto had offered only movie DVDs (which GameFly does not offer), announced that Blockbuster was expanding its DVD rental service to include video games in the second quarter of 2009. As a result of this initiative, GameFly now faces direct competition from a rival that is larger and longer established — and which, because of the preferential treatment given by the Postal Service, enjoys a substantial cost advantage in the distribution of its DVDs to consumers.”

The USPS declined to comment on the matter.

PRC spokesman Norm Scherstrom said the USPS has 30 days to file a response. The PRC then has 90 days to review the case and determine whether to dismiss or hold a hearing.

GameFly said it currently mails approximately 590,000 DVDs to its subscribers per month, and receives approximately 510,000 DVDs in return mail from its subscribers per month.


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