Hertz Set to Buy Advantage Locations, Undercutting FTC
Hertz Global Holdings Inc. (HTZ) is slated to win back rental car locations it had to sell to resolve antitrust claims over its $2.3 billion purchase of Dollar Thrifty, diluting regulators’ efforts to promote competition in the industry.
The Federal Trade Commission found the Dollar Thrifty deal was anticompetitive in 2012. Before approving the transaction, the agency required Hertz to spin off its Advantage Rent A Car business to a new buyer to maintain competition.
Advantage filed for bankruptcy last year, and now Hertz has agreed to buy back 10 Advantage locations, according to an FTC statement yesterday. The agency is seeking public comment on the proposed sale of the locations. Parsippany, New Jersey-based Avis Budget Group Inc. (CAR) has agreed to buy 12 locations, while six remain unsold, the FTC said in the statement.
“The commission has accomplished almost nothing except for this case being a continued embarrassment,” said Bob Doyle, a Washington lawyer who had urged the FTC not to give final approval to the Advantage spinoff.
Hertz’s deal to buy the locations stems from the November bankruptcy filing of Advantage. Catalyst Capital Group won an auction for Advantage assets in December, with plans to operate 40 of the rental car locations, according to the FTC.
Peter Kaplan, an FTC spokesman, declined to comment. Paula Rivera, a spokeswoman for Park Ridge, New Jersey-based Hertz didn’t immediately respond to a phone call seeking comment.
Advantage’s parent, Franchise Services of North America Inc., is seeking approval from the FTC for the sales to Hertz and Avis, which will generate $6 million in cash, according to a filing with the agency.
Franchise Services said the sales won’t harm competition.
“These sales represent the surest and quickest path for turning the lights back on with new branding and investment in the value and deep-value rental car segments,” the company said in the filing.
If the FTC approves the sale to Hertz, the agency will be recreating the anticompetitive problems it was trying to solve when it initially required Hertz to sell Advantage, Doyle said. Doyle represented industry veteran Sandy Miller who was ousted from Franchise Services in December 2012.
“The assets are going back to the previously anticompetitive buyer,” Doyle said. “From a competition perspective, this is a disgrace.”
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