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USPS, NetFlix, GameFly and Mailers

Netflix LogoThe U.S. Postal Service cannot remove its cap and hike prices on the mailers that Netflix and GameFly use to ship their rentals to customers, the U.S. Court of Appeals for the D.C. Circuit ruled Tuesday.

A three-judge panel ruled that the post office dominates the market in the round-trip mailers used by Netflix and others because companies like Fed Ex and UPS do not offer similar services. Because of that, the Postal Service cannot remove the “statutory price ceiling” on those shipments.

The court rejected the Postal Service’s argument that the market should include more than just DVD mailers. The post office said the court should consider stores, kiosks and, most importantly, streaming video. By that netflix-mailer.jpgmeasurement, the Post Office had argued it does not control the movie and game distribution market.

The ruling is a win for GameFly and Netflix, even though Netflix in particular has been moving away from physical DVD rentals for years. In the past year, Netflix has dropped nearly 1 million DVD-by-mail members. Still, the company made $80 million in profit from 4.9 million DVD customers in the fourth quarter of last year.

More on The Hill: Overnight Tech: Netflix scores win over Postal Service