[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