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The U.S. Supreme Court ruled Wednesday that the U.S. Postal Service cannot be sued under federal antitrust law, striking down a challenge from a mail sack manufacturer whose work was outsourced to a Mexican firm.

The manufacturer -- Flamingo Industries -- said that the Postal Service was attempting to suppress competition by requiring a "flat-weaving" method of production. That style of weaving, the complainants said, was unusually labor-intensive and favored overseas producers. Flamingo uses a more expensive "circular-weaving" method of mail sack production.

According to Postal Service documents, Flamingo alleged that the flat-weaving method produced a lower quality sack, but the requirement was put in place to ensure that the work was conducted overseas at a lower cost.

In a 1999 decision, the Postal Service rejected Flamingo's initial complaints and denied that the agency was attempting to outsource its work.

"The protesters assertions...are unsupported by evidence, and do not overcome the presumption that the government acts in good faith," the Postal Service ruled.

The Supreme Court's decision hinged on the issue of whether Flamingo had the right to sue the Postal Service, or whether the agency was immune from antitrust suits on the grounds it was part of the federal government. The Ninth Circuit Court of Appeals ruled that the Postal Service had only limited immunity, but the Supreme Court overturned that ruling in Wednesday's decision.

"The Postal Service is not subject to antitrust liability. In both form and function, it is not a separate antitrust person from the United States but is part of the government, and so is not controlled by the antitrust laws," the court ruled.

The Postal Reorganization Act -- signed into law in 1970 -- allowed the Postal Service to sue and be sued. The Supreme Court ruled, however, that "the Postal Service is not a separate person from the United States." The justices said that Congress could not have intended to open the federal government to antitrust lawsuits.

Flamingo has said that the Postal Service should be held accountable to antitrust laws because it competes with nongovernmental businesses outside of its primary duties. The Supreme Court acknowledged that the Postal Service "does operate nonpostal lines of business." The court also said that "the great majority of the organization's business, however, consists of postal services."

COMMENTS

• This means monopoly is legal for the government but not for US citizens? By what right? And by what standard? This implies that the government is a self-appointed authority on the subject of citizens private lives. It knows what's best for them...better than they know themselves. And this coming from a bunch of Robin Hoods who have set up a "legal" environment like the IRS and backed by their cronies in the Supreme Court to rob us of our hard-earned livelihoods. Because under all that paperwork there's a gun. And their motto is: "Pay up or else". Isn't it? GovExec.com reader Posted March 3, 2004 12:55 PM
• Heaven forbid the Postal Service should change! Why does the postal service care about the weaving method? They only should be concerned with the function of the bags and not how they are made. Specify a life or a breathing characteristic the bags must match but do not lock in an obsolete technology just because you cannot handle change. GovExec.com reader Posted February 27, 2004 6:16 AM