ACMA Sends Greco “Dear John” Letter

May 22, 2007 2:17 AM  By

The finger-pointing has escalated between the American Catalog Mailers Association (ACMA) and the Direct Marketing Association. In a letter to DMA president/CEO John A Greco Jr., ACMA president Hamilton Davison took Greco to task for his comments last week suggesting that the Coalition of Catalog Mailers (CCM), which the AMCA supports, undermined the DMA’s legislative efforts.

In the letter, Davison writes:

“In the course of the recent rate case, catalogers relied on DMA to inform them and protect their interests. Unlike many other groups within DMA, catalogers do not have specialized associations representing their interests before the PRC [Postal Regulatory Commission]. Despite this reliance on DMA, there was no ‘call to action’ to warn catalogers that 20%-40% rate increases for flats, far higher increases than those proposed by the Postal Service, were becoming a real possibility. DMA did not solicit testimony from catalogers to oppose such drastic rate increases. In fact, the PRC subsequently held that catalogers had sufficient notice of the 20%-40% rate increases to file rebuttal testimony because their trade association participated in the rate case proceeding.

“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 rate 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.”

Davison goes on to write:

“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 [rate case] decision – any lesser response would have failed to adequately represent the interests of our industry.

“The Postal Service responded with the complementary position that if the Commission did not want to reopen the record, there was adequate evidence on the existing record to support relief. The Postal Service also pointed out that DMA’s suggestion that the Commission could avoid reconsidering the evidence by simply changing its estimates for the elasticity of catalogs was legally impossible.

“To suggest that our 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, 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. 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.”

Related articles:
Q&A with DMA Chief John Greco

New Kid in Town: the American Catalog Mailers Association