Red Light for Rentals

The most lucrative place for rent-a-car companies to be is in airports. Needing ground transport, plane passengers account for about 70% of the $700 million in annual auto rentals. Last year however, the Federal Trade Commission charged that 96% of all airport car-rental income went to the three largest companies--Hertz, Avis and National --so the FTC sued the Big Three, accusing them of conspiring to freeze competitors out of airports. The Commission claimed that their rates were 10% to 40% higher than smaller firms.

Last week the companies settled the case without admitting any guilt. Each signed an FTC consent order in which it agreed not to indulge in any of the alleged antitrust practices. One clause forbids the collusive setting of auto-rental rates. Another bars any effort to persuade airport authorities to write into concession contracts requirements that smaller companies cannot meet.

Since the antitrust suit was filed, the Big Three have adjusted their prices to meet those of smaller competitors. In addition, FTC officials say, there has been a "fantastic" increase in the number of small car-rental companies that are winning concession rights in airports. Nonetheless, if the FTC finds reason to think that the Big Three are restricting competition at any time, it has a quick remedy. The new order includes a provision that forbids them to conspire to monopolize the business even outside airports--or face civil penalties of up to $10,000 per violation.

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