[Federal Register Volume 77, Number 227 (Monday, November 26, 2012)]
[Notices]
[Pages 70440-70443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28517]
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FEDERAL TRADE COMMISSION
[File No. 101 0137]
Hertz Global Holdings, Inc.; Analysis of Agreement Containing
Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis To
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before December 17, 2012.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/hertzdollarthriftyconsent online or on
paper, by following the instructions in the Request for Comment part of
the SUPPLEMENTARY INFORMATION section below. Write ``Hertz, File No.
101 0137'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/hertzdollarthriftyconsent by following
the instructions on the web-based form. If you prefer to file your
comment on paper, mail or deliver your comment to the following
address: Federal Trade Commission, Office of the Secretary, Room H-113
(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Michael R. Moiseyev (202-326-3106),
FTC, Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis To Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for November 15, 2012), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained
from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue
NW., Washington, DC 20580, either in person or by calling (202) 326-
2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 17,
2012. Write ``Hertz, File No. 101 0137'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which * * * is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/hertzdollarthriftyconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``Hertz, File No. 101
0137'' on your comment and on the envelope, and mail or deliver it to
the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before December 17, 2012. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted from
Hertz Global Holdings, Inc. (``Hertz''), subject to final approval, an
Agreement Containing Consent Orders (``Consent Agreement''), which is
designed to remedy the anticompetitive effects resulting from Hertz's
proposed acquisition of Dollar Thrifty Automotive Group, Inc. (``Dollar
Thrifty''). Under the terms of the Consent Agreement, Hertz will divest
its Advantage Rent A Car (``Advantage'') business as well as the right
to operate at 16 additional Dollar Thrifty on-airport locations at
which Advantage does not yet operate to Franchise Services of North
America, Inc. (``FSNA'') and Macquarie Capital
[[Page 70441]]
USA Inc. (``Macquarie'') (collectively ``FSNA/Macquarie''). Hertz will
also divest 13 additional Dollar Thrifty on-airport locations to FSNA/
Macquarie or another buyer, subject to the approval of the Commission,
following the closing of its acquisition of Dollar Thrifty.
The proposed Consent Agreement has been placed on the public record
for 30 days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will again review the proposed Consent
Agreement and will decide whether it should withdraw from the proposed
Consent Agreement, modify it, or make it final.
Pursuant to an Agreement and Plan of Merger dated August 26, 2012,
Hertz plans to acquire Dollar Thrifty for approximately $2.3 billion.
The Commission's Complaint alleges that the proposed acquisition, if
consummated, would violate Section 7 of the Clayton Act, as amended, 15
U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as
amended, 15 U.S.C. 45, by lessening competition in the market for
airport car rentals.
II. The Parties
Hertz, headquartered in Park Ridge, New Jersey, is a global
supplier of automobile and equipment rentals and related products and
services. The company provides car rentals to consumers at virtually
every large or medium-sized commercial airport in the United States.
Dollar Thrifty is headquartered in Tulsa, Oklahoma, and supplies
automobile rentals to customers throughout the United States and
Canada. In the United States, Dollar Thrifty is present at most major
airports, and it operates 86 company-owned airport locations.
III. The Relevant Product and Structure of the Markets
The acquisition threatens to harm competition in the airport car
rental market. Airport car rentals consist of car rentals made to
consumers at airport locations. Airport car rentals are a distinct
relevant market because alternative modes of transportation, such as a
taxis or buses, are not reasonable substitutes. Other forms of
transportation do not provide the convenience, autonomy, or cost
efficiency of renting a car, and, as a practical matter, customers are
unlikely to turn to these alternative forms of transportation in
response to a small but significant increase in airport car rental
prices. There are two categories of airport car rentals: those made to
individual customers; and contracted rentals that are available only to
volume purchasers, such as corporate or government customers who have
pre-negotiated car rental contracts and tour operators offering
vacation packages. The competitive concerns associated with the
proposed transaction are similar whether the market is viewed as an
overall airport car rental market, or as a narrower one excluding
rentals made pursuant to pre-negotiated rates and terms.
There are four major competitors operating in the airport car
rental market: Hertz, which operates the Advantage and Hertz brands;
Dollar Thrifty, which operates the Dollar and Thrifty brands; Avis
Budget Group, Inc., which operates the Avis and Budget brands; and
Enterprise Holdings, Inc., which operates the National, Alamo, and
Enterprise brands. Market shares vary by individual airport, but on a
national level these four firms account for approximately 98% of all
U.S. airport car rentals.
The relevant geographic markets in which to evaluate the
competitive effects of the acquisition are 72 individual airport
locations:
Albuquerque, New Mexico (Albuquerque International Sunport
Airport)
Atlanta, Georgia (Hartsfield-Jackson International Airport)
Austin, Texas (Austin-Bergstrom International Airport)
Baltimore, Maryland (Baltimore/Washington International
Thurgood Marshall Airport)
Boston, Massachusetts (Logan International Airport)
Burbank, California (Burbank Bob Hope Airport)
Burlington, Vermont (Burlington International Airport)
Charleston, South Carolina (Charleston International Airport)
Charlotte, North Carolina (Charlotte Douglas International
Airport)
Chicago, Illinois (Chicago Midway International Airport)
Chicago, Illinois (Chicago O'Hare International Airport)
Cincinnati, Ohio (Cincinnati/Northern Kentucky International
Airport)
Cleveland, Ohio (Cleveland Hopkins International Airport)
Colorado Springs, Colorado (Colorado Springs Airport)
Dallas, Texas (Dallas Love Field Airport)
Dallas, Texas (Dallas/Fort Worth International Airport)
Detroit, Michigan (Detroit Metro Airport)
Denver, Colorado (Denver International Airport)
Des Moines, Iowa (Des Moines Airport)
El Paso, Texas (El Paso Airport)
Fort Lauderdale, Florida (Fort Lauderdale-Hollywood Airport)
Fort Myers, Florida (Southwest Florida International Airport)
Fort Walton Beach, Florida (Fort Walton Beach Regional
Airport)
Harlingen, Texas (Valley International Airport)
Hartford, Connecticut (Bradley International Airport)
Hilo, Hawaii (Hilo International Airport)
Honolulu, Hawaii (Honolulu International Airport)
Houston, Texas (George Bush Intercontinental Airport)
Houston, Texas (William P. Hobby Airport)
Jacksonville, Florida (Jacksonville International Airport)
Kahului, Hawaii (Kahului Airport)
Las Vegas, Nevada (McCarran International Airport)
Lihue, Hawaii (Lihue Airport)
Los Angeles, California (Los Angeles International Airport)
Louisville, Kentucky (Louisville International Airport)
Manchester, New Hampshire (Manchester-Boston Regional Airport)
Miami, Florida (Miami International Airport)
Milwaukee, Wisconsin (Milwaukee International Airport)
Minneapolis-St. Paul, Minnesota (Minneapolis-St. Paul
International Airport)
Nashville, Tennessee (Nashville International Airport)
New York, New York (LaGuardia Airport)
New York, New York (John F. Kennedy International Airport)
Newark, New Jersey (Newark Liberty International Airport)
Norfolk, Virginia (Norfolk International Airport)
Oakland, California (Oakland International Airport)
Oklahoma City, Oklahoma (Will Rogers World Airport)
Omaha, Nebraska (Omaha Airport)
Los Angeles, California (Ontario International Airport)
Orange County, California (John Wayne Airport)
Orlando, Florida (Orlando International Airport)
Pensacola, Florida (Pensacola International Airport)
Phoenix, Arizona (Sky Harbor Airport)
Pittsburgh, Pennsylvania (Pittsburgh International Airport)
[[Page 70442]]
Portland, Oregon (Portland International Airport)
Providence, Rhode Island (T.F. Green Airport)
Raleigh-Durham, North Carolina (Raleigh-Durham International
Airport)
Reno, Nevada (Reno-Tahoe International Airport)
Richmond, Virginia (Richmond International Airport)
Sacramento, California (Sacramento International Airport)
Salt Lake City, Utah (Salt Lake City International Airport)
San Antonio, Texas (San Antonio International Airport)
San Diego, California (San Diego International Airport)
Sanford, Florida (Orlando-Sanford International Airport)
San Francisco, California (San Francisco International
Airport)
San Jose, California (Norman Y. Mineta San Jose International
Airport)
Sarasota, Florida (Sarasota Bradenton International Airport)
Seattle, Washington (Seattle-Tacoma International Airport)
Tampa, Florida (Tampa International Airport)
Tulsa, Oklahoma (Tulsa International Airport)
Washington, District of Columbia (Ronald Reagan National
Airport)
Washington, District of Columbia (Washington Dulles
International Airport)
West Palm Beach, Florida (Palm Beach International Airport)
IV. Entry
Neither new entry nor repositioning and expansion sufficient to
deter or counteract the anticompetitive effects of the proposed
acquisition is likely to occur within two years. A new entrant to the
airport car rental market would face significant obstacles, as entering
the airport car rental business on an efficient scale is both expensive
and time-consuming. In order to compete effectively across geographic
markets, a new entrant must have concession contracts in place that
allow it to operate at each individual airport, establish brand
identity, gain access to online travel agencies and other distribution
channels, and be of a size sufficient to achieve economies of scale.
Further, in order to draw customers, a new entrant would have to
develop a reputation for quality and reliability, and it would take at
least several years to acquire a reputation on par with the existing
national firms. These entry barriers have limited existing fringe firms
from expanding beyond their regional footprints and collective low
single-digit market share. Accordingly, new entry would not be timely,
likely, or sufficient to counteract the anticompetitive effects that
would arise as a result of the acquisition.
V. Effects of the Acquisition
Hertz and Dollar Thrifty are two of four major competitors in
markets for airport car rentals. By eliminating the substantial
competition between Hertz and Dollar Thrifty, the proposed acquisition
would cause consumers of airport car rentals to pay higher prices and
experience reduced levels of service and slower innovation rates.
With only four suppliers of national significance, the markets for
airport car rentals are already highly concentrated. In many instances,
Hertz and Dollar Thrifty compete head-to-head for the sale of airport
car rentals in each relevant market. Among other ways of competing with
Dollar Thrifty, Hertz's low-priced Advantage brand is positioned
similarly to Dollar Thrifty in terms of price, features, and customer
service, and Hertz's incentive to continue to expand Advantage would be
reduced significantly post-acquisition. The elimination of the direct
current and future competition between Hertz and Dollar Thrifty would
allow Hertz to increase prices, slow the pace of innovation, and/or
decrease service levels. In addition, the fact that only three firms
would own all of the most competitively significant brands after the
proposed acquisition leads to an increased likelihood of coordination
among the remaining competitors.
VI. The Consent Agreement
The proposed Consent Agreement resolves the acquisition's
anticompetitive effects by requiring Hertz to divest its entire
Advantage business as well as 16 additional on-airport locations to
FSNA/Macquarie. This divestiture will effectively replicate the loss of
current and future competition that would occur if Hertz acquires
Dollar Thrifty. Also, by creating a new independently-owned competitor
with a national footprint, the Consent Agreement effectively addresses
the threat of increased coordinated interaction among the remaining
competitors. The Consent Agreement also requires that Hertz divest 13
additional Dollar Thrifty airport concession agreements and related
assets to a Commission-approved buyer, whether FSNA/Macquarie or
another acquirer, within 60 days of the closing of the acquisition.
This requirement further ensures that the acquisition will not harm
competition in the airport car rental market.
FSNA/Macquarie possesses the resources and capability to acquire
the divested assets and replace Dollar Thrifty as an effective
competitor in the affected geographic markets. FSNA has existing
relationships with the major online travel agencies, has the IT
infrastructure necessary to support the divested assets, and managers
experienced in running a national airport car rental company. Macquarie
is a global provider of banking, financial, advisory, investment and
funds management services. Macquarie has committed substantial
financial resources to the Advantage transaction, and it expects to
provide additional growth capital as needed. FSNA/Macquarie's resources
and expertise, together with the initial rental car fleet and other
support terms contained in the Consent Agreement, will enable FSNA/
Macquarie to compete effectively as the fourth largest rental car
company in the country.
Pursuant to the Consent Agreement, FSNA/Macquarie will receive the
assets necessary to replicate Advantage's airport car rental business,
and this, coupled with the divestiture of the additional Dollar Thrifty
airport concession agreements and related assets, remedies the
unilateral and coordinated anticompetitive effects of the transaction.
In addition to ensuring that employees of the businesses have the
incentive to continue their employment with the acquirers, the Consent
Agreement requires Hertz to provide FSNA/Macquarie with access to an
initial rental car fleet and related support until FSNA/Macquarie can
independently obtain its own fleet of cars. Combined, the Consent
Agreement provisions ensure the benefits of competition that would
otherwise have been lost through the acquisition will be maintained.
The Commission has appointed an interim monitor to oversee the
divestiture of the assets after the Consent Agreement has been signed.
In order to ensure that the Commission remains informed about the
status of the proposed divestitures, the proposed Consent Agreement
requires the parties to file periodic reports with the Commission until
the divestiture is accomplished. If the Commission determines that
Hertz has not fully complied with its obligations under the Decision
and Order within ten days after the date the Decision and Order becomes
final, the Commission may seek civil penalties to ensure that Hertz
remains in compliance.
[[Page 70443]]
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Decision and Order or to modify its
terms in any way.
By direction of the Commission, Commissioner Rosch dissenting.
Donald S. Clark,
Secretary.
[FR Doc. 2012-28517 Filed 11-23-12; 8:45 am]
BILLING CODE 6750-01-P