Commission stops rental car companies price fixing
Published07 Apr 1997
A Commerce Commission investigation has stopped a price fixing arrangement among six Picton rental car companies.
Commission Chairman Dr Alan Bollard said the six companies, McDonald Rent-a-Car, Nationwide & Sterling Rentals, Avon Rent-a-Car, New Zealand Rent a Car, Hardy Cars Car Rentals and Thrifty Rental Cars, have entered a settlement with the Commission stopping their arrangement and ensuring they will not enter into similar arrangements in future.
The Commerce Act prohibits price fixing because it prevents customer choice influencing price competition.
"Competitors must not discuss prices, discounts, commission rates or any other pricing issues with each other," Dr Bollard said.
"The Act prohibits price fixing contracts, arrangements and understandings. That means even informal understandings discussed over a coffee or at a social meeting can breach the Act.
"My advice to any business people at a meeting that starts to discuss pricing is to leave straight away."
The Commission became aware of the arrangement in this case when another company, Apex Car Rentals, began operating from the Picton ferry terminal.
Apex put a billboard outside its office advertising its discount rates. The six companies approached Apex and told it about their arrangement which prevented such advertising. Apex gave information about the arrangement to the Commission.
Dr Bollard said the Commission's investigation showed that the purpose of the arrangement was to prevent discounting and to keep rental car rates in the local area higher.
"In our view, the arrangement was a form of price fixing and was at risk of breaching the Commerce Act," he said.
"The issue is now resolved, but we will make follow up checks to ensure the settlement its complied with."
