Antitrust Law Daily Wrap Up, ANTITRUST—S.D.N.Y.: Consent decree resolving challenge to New York tour bus JV approved, (Nov 18, 2015)

By Jeffrey May, J.D.

The federal district court in New York City has approved a consent decree, settling a federal/state antitrust challenge to a New York City tour bus joint venture (JV). The consent decree resolved charges brought by the U.S. Department of Justice Antitrust Division and the New York Attorney General's Office that the JV violated Section 7 of the Clayton Act, Section 1 of the Sherman Act, and Section 340 of the New York Donnelly Act. Under the settlement, Coach USA Inc., City Sights LLC and their joint venture—Twin America LLC—agreed to relinquish bus stops and to disgorge $7.5 million in ill-gotten profits allegedly obtained from the operation of their illegal joint venture (U.S. v. Twin America, LLC, November 17, 2015, Carter, A.).

In December 2012, the federal and state enforcers filed a complaint, alleging that the JV harmed competition in the hop-on, hop-off bus tour market. Hop-on, hop-off bus tours combine sightseeing and transportation by providing tourists with a professionally-guided tour of New York City, while giving them the ability to “hop off” the tour bus at various locations to further explore attractions of interest and later “hop on” another bus to continue along the tour route using the same ticket. The tours are offered on open-top double-decker buses, which enable passengers to view New York City's attractions and neighborhoods from a heightened vantage point, the Department of Justice explained. The government alleged that the 2009 JV created the “sole player” in the market for hop-on, hop-off bus tours, ending competition between Coach and City Sights.

The consent decree, which was agreed to by the parties in March 2015, required the defendants to relinquish all of the City Sights Manhattan bus stop authorizations to the New York City Department of Transportation (NYCDOT). Access to these bus stop authorizations was intended to make it easier for rivals to meaningfully compete with Twin America, according to the government. In addition, the defendants were required to disgorge $7.5 million in ill-gotten profits allegedly obtained from the operation of their joint venture. The $7.5 million in disgorgement was in addition to the defendants’ agreement to pay $19 million to a class of consumers to settle related private litigation brought after the filing of the government’s complaint.

Compliance program, notification requirements. The defendants also were required to establish antitrust compliance programs and provide the government with advance notice of any future acquisition in the New York City hop-on hop-off bus tour market that was not otherwise reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The formation of Twin America was not subject to the HSR Act.

This is Civil Action No. 12-cv-8989 (ALC) (GWG).

Attorneys: Sarah Wagner for U.S. Department of Justice Antitrust Division. Eric J. Stock for State of New York Attorney General's Office. Michael P.A. Cohen (Paul Hastings LLP) for Twin America, LLC, CitySights LLC, and City Sights Twin, LLC. Thomas O. Barnett (Covington & Burling LLP) for Coach USA, Inc. and International Bus Services, Inc.

Companies: Twin America, LLC, Coach USA, Inc., International Bus Services, Inc., Citysights LLC, City Sights Twin, LLC

Cases: AcquisitionsMergers Antitrust AntitrustDivisionNews