The Australian Competition and Consumer Commission today announced it would not oppose the acquisition of Budget Australia (also known as Budget Rent A Car) by the Cendant Corporation, the parent company of Avis Australia.
"Having regard to market conditions, the continuing presence of strong competitors and the opportunity for new entry, the ACCC does not believe the transaction will result in a substantial lessening of competition for car rental services", ACCC Chairman, Professor Allan Fels, said.
Careful consideration was given to the effect of the acquisition on different parts of the car rental market, and views were sought from both customers and competitors.
"While ACCC inquiries suggest that the combined market share of Avis and Budget may be over 40 per cent in some areas, well-known and established brands such as Hertz, Thrifty and Europcar will have competitive market share and capacity post acquisition. Moreover, in the wider market, there are a range of smaller operators keen to increase their business".
The ACCC noted, in respect of airport business, that the number of market players awarded on site and off site licences had increased in recent times and that most airports were due to issue tenders for on airport desks during the next two years.
"This is still a contestable market overall and responsive to the needs of different customer groups. Individual and leisure customers will still be able to shop around for the best deal, and corporate customers can still exert bargaining power through their contracting", he said.
Professor Fels commented that large national contracts had gone to new entrants in the industry and several operators had expanded operations and extended their national reach.
The acquisition is a result of Cendant's purchase of the Budget Group and related assets in the United States of America and elsewhere overseas.
"The ACCC sees this transaction as one brand acquiring another but notes that Cendant has publicly stated that it intends to maintain and operate Avis and Budget as independent networks and brands across Australia", Professor Fels said.