Anticipated acquisition by Europcar UK Limited of Vanguard Car Rental Emea Holdings Ltd

Affected market: Car rental

No. ME/2802/06

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.

The OFT's decision on reference under section 33(1) given on 12 February 2007. Full text of decision published 22 February 2007.

Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.

PARTIES

Europcar UK Limited (Europcar) is a subsidiary of Europcar Groupe SA (Europcar Groupe), which is principally involved in car and light commercial vehicle rental services in Europe, operated through a combination of wholly owned subsidiaries and franchisee partners. Europcar's UK turnover in 2005 was [ ].

Vanguard Car Rental EMEA Holdings Ltd (Vanguard) is a holding company for the activities of Vanguard Car Rental Group Inc (Vanguard Inc) in Europe, the Middle East and Africa. Vanguard Inc is a US-based car rental services company, which operates primarily under the 'National' and 'Alamo' brands. Vanguard's UK turnover in 2005 was [ ].

TRANSACTION

On 13 November 2006, Europcar Groupe announced that they had entered into an agreement under which Europcar Groupe will acquire, by way of a share purchase agreement, all of the shares in Vanguard. Europcar Groupe will obtain certain rights to use the National and Alamo brands within Europe, the Middle East and Africa, with Vanguard Inc retaining the business and the brand names elsewhere.

Europcar intends to continue to operate the two networks as separate businesses, and the Vanguard outlets in the UK (both at airport and downtown locations) will continue to carry the Vanguard brands (principally National and Alamo).

The parties notified the transaction on 12 December 2006 and the administrative deadline is 12 February 2007.

JURISDICTION

As a result of this transaction Europcar and Vanguard will cease to be distinct. Vanguard has a UK turnover in excess of £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

THIRD PARTY VIEWS

Overall, only a few third parties contacted expressed significant concern about competitive aspects of the merger. Some concerns were expressed about the impact of the merger on competition in the airport car rental sector. Other concerns related to whether Europcar and Vanguard would continue to bid for and operate separate concessions desks at airports, and thereby avoid freeing up existing concessions for other potential operators.

The substantial majority of third parties, including customers, airports and airlines, were unconcerned.

ASSESSMENT

The parties overlap in relation to the supply of short term car rental service in the UK and more also specifically short term on-airport car rental. Post merger the parties will have a combined share of supply of [between 20 and 30 per cent] in general short term car rental with an increment of [between 0 to 10 per cent]. In relation to short term on-airport car rental, in the UK post merger the parties will have a combined share of supply of [35-45] per cent with an increment of [15-25] per cent.

No third parties raised concerns in relation to general short term car rental in the UK. Although, there were some third party concerns in relation to on-airport car rentals, the evidence obtained by the OFT did not show that there was a significant increase in the risk of non-coordinated effects, given that there are enough competitors remaining at the airports where the parties overlap to act as a competitive restraint, and that there was the prospect of entry, supported by recent examples, to maintain competition.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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