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Court rules Netflix receives unfair advantage in GameFly postal dispute


The US Court of Appeals ruled today that Netflix does receive an unfair advantage from the U.S. Postal Service in how it handles DVDs shipped through the system. Reuters reports the court is leaving it up to the Postal Regulatory Commission to create an equitable solution.

Netflix receives preferential treatment and specially designated containers due to the volume of mail it sends through the system. Judge David Sentelle noted, "Rather obviously, this is not without cost to the postal service. Nonetheless, the service provides it to Netflix free of charge."

The latest ruling is a continuation of the multi-year dispute by GameFly, which claims it's had to make adjustments that cost millions because the postal service won't give the game rental service the same treatment.

Update: GameFly has sent us an official statement regarding today's ruling. Posted in full after break.

"We are very pleased by the decision. GameFly has been trying for more than five years to get the Postal Service to take seriously its obligation not to discriminate unlawfully among its customers," said GameFly's CEO, Dave Hodess. "We trust that the Commission will take the court's decision to heart, and require the Postal Service to be compliant with the law by offering the same price and quality of service to all DVD rental companies. We have paid millions in excess postage fees over the past 10 years, and fair treatment by the USPS will enable us to keep our costs as low as possible for our customers."

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