Competition Takes It on the Chin in the Rental Car Market

Hertz to buy car hire rival Dollar Thrifty for $2.3 billion | Reuters

Hertz Global Holdings (HTZ.N) agreed to buy rival Dollar Thrifty Automotive Group (DTG.N) for about $2.3 billion in a deal that puts about 95 percent of the U.S. car rental market in the hands of three companies.

The sale ends more than two years of on-off takeover talks for Dollar Thrifty involving Hertz, the No. 2. U.S. car rental company, and third-ranked Avis Group Inc (CAR.O) that have been plagued by disagreements over price and doubts about regulatory approval.

Avis could still make a further bid. The deal has no break-up fee and Dollar Thrifty is allowed to solicit another offer for 30 days, a person familiar with the matter told Reuters.

If it is confirmed, the deal will cement Hertz’s position as the number two and leaves Avis far behind in third. Privately held Enterprise Holdings, with its Alamo, National and Enterprise brands, is far and away the market leader.

Hertz to buy car hire rival Dollar Thrifty for $2.3 billion | Reuters

Isn’t buying out your competition and controlling most of the market moving toward a monopoly? Is that the free market in operation. No, but there will be many that claim it is. “Creative Destruction” is the rule – if you are a free market fundamentalist – religion without a God unless you can consider the filthy green, a deity.

Is it ethical? Well, it’s legal. For our corporate world that is quite enough.

Competing in terms of product or price or service is hard. Buying them out, easy.

James Pilant