Antitrust Law Daily Wrap Up, TOP STORY—FTC Conditionally Approves Proposed $2.3 Billion Acquisition of Dollar Thrifty by Hertz, (Nov 16, 2012)

By Jeffrey May, J.D.

As an agreement between Hertz Global Holdings, Inc. and the FTC staff providing the agency with additional time to review a proposed combination of Hertz and Dollar Thrifty Automotive Group, Inc. was about to expire, the FTC approved the deal subject to significant divestitures (In the Matter of Hertz Global Holdings, Inc., Dkt. C-4376, File No. 101 0137, announced November 15, 2012).

Hertz has agreed to sell its Advantage Rent A Car (Advantage) business, as well as the rights to operate 29 Dollar Thrifty on-airport locations, under the terms of a proposed consent order. The consent order, if approved by the Commission, would settle a complaint alleging that the deal, as it was originally proposed, would have harmed competition at 72 airports around the country, from Albuquerque to West Palm Beach.

In October, Hertz announced that it would provide the FTC with more time to conduct its review of the transaction. Hertz had entered into an agreement with the agency staff not to close the deal before November 1. Because the agency needed more time to conduct its review, Hertz agreed to extend the term of its timing agreement with until 11:59 p.m. on November 16.

In October, Hertz announced that it would provide the FTC with more time to conduct its review of the transaction. Hertz had entered into an agreement with the agency staff not to close the deal before November 1. Because the agency needed more time to conduct its review, Hertz agreed to extend the term of its timing agreement with until 11:59 p.m. on November 16.

As part of the proposed settlement with the FTC, announced on November 15, Hertz agreed to sell to FSNA and Macquarie its entire Advantage business as well as 16 Dollar Thrifty on-airport locations where Advantage does not yet operate. In addition, Hertz will sell another 13 Dollar Thrifty on-airport locations to FSNA/Macquarie or another FTC-approved buyer after the deal closes.

The Commission identified 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. The four firms account for approximately 98% of all U.S. airport car rentals, according to the FTC.

Hertz has been pursuing Dollar Thrifty for years. The pursuit was complicated by a bidding war for Dollar Thrifty with rival Avis Budget Group.

Hertz is a major player in the corporate and premium segments of the car rental industry, while Dollar Thrifty focuses on value-oriented customers. Hertz is the number one airport car rental brand in the United States. It operates from approximately 8,650 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East, and New Zealand. According to the FTC, the company provides car rentals to consumers at virtually every large or medium-sized commercial airport in the United States.

Dollar Thrifty has approximately 1,575 corporate and franchised worldwide locations, including approximately 585 in 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.

Dissent

The Commission’s vote approving the complaint and proposed consent order for public comment was four to one, with Commissioner J. Thomas Rosch dissenting. Commissioner Rosch said that the settlement was “inadequate to resolve the competitive concerns at several dozen other airports affected by the transaction.” He believes there is a “significant risk of post-merger coordinated interaction among the remaining competitors.”

Joe Sims (Jones Day) for Hertz Global Holdings, Inc.

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