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E-Payment Firm Asks Federal Court To Dismiss Rival's "Tying" Claim

An electronic payment provider to the air and ocean freight industries asked a federal district court in Georgia to dismiss a complaint filed by a rival company accusing it of "tying," an illegal act that conditions the sale of one product on the buy

Benzinga · 01/20/2020 14:04

An electronic payment provider to the air and ocean freight industries asked a federal district court in Georgia to dismiss a complaint filed by a rival company accusing it of "tying," an illegal act that conditions the sale of one product on the buyer's purchase or continued use of a separate product that has strong market dominance.

Paycargo LLC had accused rival CargoSprint LLC of attempting to tie CargoSprint's SprintPay product with its allegedly market-dominant SprintPass, which electronically coordinates shipment pickups at warehouse docks. In a Jan. 13 filing with a federal district court in Newnan, Georgia, south of Atlanta, CargoSprint said a competitive market exists for services similar to those of SprintPass. Three providers — one in the U.S. and two in Europe — are considering entering the market, CargoSprint noted.

What's more, SprintPass just entered the market in 2018, and it has far from completely changed freight forwarders' and cargo handlers' long-held practice of performing these tasks through their internal systems, CargoSprint said.

Paycargo and CargoSprint account for a small slice of the payment market, CargoSprint said in its motion. Transport and logistics companies still overwhelmingly rely on traditional payment methods such as paper checks, escrow accounts and short-term lines of credit to cover shipping and handling services, CargoSprint said.

Paycargo failed to prove the existence of "any barriers to entry or cost advantages" that it holds with SprintPass which would exclude competition or would result in unlawful tying, CargoSprint said.

Companies allegedly use "tying" to boost their share of newer, less-established products by forcing customers that rely on the more dominant product to use both.

Image by Photo Mix from Pixabay