Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd & Ors [1978] FCA 40

Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd & Ors [1978] FCA 40 - FCA 1978 case summary — Zoe

[52]

Car rental businesses are conducted throughout Australia by a large number of operators estimated in all to number over 160. Most of the operators, identified as the local operators, conduct their activities within a limited geographic area. The area may comprise a capital city, a country city or town or a geographic region. A limited number of operators, identified as the national operators, conduct their activities on an Australia-wide basis. Mr. Searby submitted that on the evidence the relevant car rental market should be identified as the national car rental market. He submitted that this market extended throughout Australia and was to be identified by reference to the operators who conducted their business on a national basis throughout Australia. These operators he said all had similar features namely pricing structures based on an Australia-wide operation resulting in higher costs of management, national advertising throughout Australia, national rates which applied throughout Australia, their own credit facilities apart from credit facilities controlled by other persons, the facility to provide a car anywhere throughout Australia, a network of servicing and emergency facilities to enable the speedy replacement of a rented car in the event of a breakdown anywhere within Australia, the service of providing a booking system throughout Australia through their national operations, the benefit of international credit facilities and the provision of one way rentals, 1.e. a service whereby a car can be rented at one place and the rental terminated at another place. He said that the national operators comprised Avis, Kay Rent-a-Car Pty. Ltd. (Kay-Hertz), Budget Rent-a-Car System Pty. Ltd. (Budget) and possibly Letz Rent-a-Car System Pty. Ltd. (Letz). The other car rental operators he said conducted their business within discreet markets having limited geographic boundaries being the capital city, country city or town or regional area respectively and should not be included as operators in the national car rental market.

[363]

47 - packages, each engaged Avis to provide the car rental component. Ansett Operations did not consider the possibility of seeking quotes from other car rental operators, an effect of the airport franchise. The Tasmanian Tourist Bureau markets fly-drive holiday packages in Tasmania under the name of "Tasbureau Fly-drive Holidays". In marketing these packages, the Bureau engaged either TAA or Ansett Airlines to provide the airline component and allocates the car rental component equally between a number of car rental operators including Avis, Kay-Hertz and a local operator, Auto Rent Pty. Ltd., which has a franchise from Budget to use the name and facilities of Budget. Recently three local operators amalgamated to form Auto Rent Pty. Ltd. and, prior to that amalgamation, each of those three operators participated in the Tasbureau fly-drive holidays. Towards the end of the year 1977, East West Airlines marketed a fly-drive holiday package in Tasmania which involved a direct flight from Sydney to Hobart. East West Airlines engaged Kay-Hertz to supply, on an exclusive basis, the car rental component of that holiday package. TAA and Ansett Airlines responded by each marketing a fly-drive holiday package involving a direct flight from Sydney to Launceston. "The package marketed by Ansett Airlines was to be over a period of four months only. TAA and Ansett Airlines each engaged Avis on an exclusive basis to provide the car rental component, Avis agreed to provide the cars at a special discount rate. The Bureau approached TAA and Ansett Airlines seeking approval to participate in the package. TAA refused but Ansett Airlines agreed. The Bureau then approached other car rental operators in Tasmania to see if they would provide the car rental component at the same discount rate as Avis. Ansett Airlines refused to accept this and informed the Bureau that Avis was to have the exclusive right to the car component for the holiday package and that if the Bureau wanted to participate in the package, it would have to accept Avis. As a result the Bureau had to choose whether 1t would continue to participate in the package even though this meant a departure from its general policy of sharing the car rental component among a number of car rental operators. The Commission argued that this illustrated a method by which Ansett Oper- ations could favour Avis to the disadvantage of other car rental operators. I do not accept that argument. With one minor exception, TAA and Ansett Airlines, when marketing holiday packages, each engage Avis exclusively to supply the car rental component. The incident

[373]

The corporate integration illustrated in the United Brands Co. case, supra, by which that undertaking was directly involved in the process of growing, distributing and marketing bananas, 1s markedly different from the corporate integration resulting from the acquisition by Ansett Operations of all the shares in the capital of Avis. Asa result of that acquisition, it 1s not likely that the market share of the car rental market in Australia, presently held by Avis, will increase, particularly following the expiration of the airport franchise, and consequently it 1s not likely that the market share held by Ansett Operations would be greater than that presently held by Avis. It is not likely that keen and effective competition between car rental operators will cease following the acquisition of the Avis shares by Ansett Operations, It 1s not likely that car rental charges will cease to be competitive and it 1s not likely that Ansett Operations will be able to determine its charges without being inhibited by the charges made by other car rental operators. It 1s not likely that the height of barriers to entry by new car rental operators will be increased. It is likely that Ansett Operations will direct its car rental operators to the whole of the car rental market in Australia and will not limit its activities to actual or potential customers of Ansett Airlines. It is likely, therefore, that the existing similarities and differentiations in the services provided by car rental operators in Australia will continue. There is nothing resulting from the acquisition and the resulting new corporate integration and relationship which 1s likely to result in Ansett Operations being in a stronger position to dominate the car rental market in Australia than the position currently held by Avis. In my opinion, as a result of the acquisition of all the shares in the capital of Avis, Ansett Operations would not be likely to be ina position to dominate the car rental market in Australia.

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Judgment (405 paragraphs)