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FTC SETTLES "INVITATION TO COLLUDE" CHARGES AGAINST TRUCK RENTAL COMPANY

- January 2011


FTC Settles “Invitation to Collude” Charges Against Truck Rental Company

The Federal Trade Commission charged U-Haul International and its parent firm with a violation of the FTC Act by inviting the firm’s closest competitor, Avis Budget Group, to collude on prices for truck rentals. Collectively, the two firms had more than 70% share of the one-way truck rental market in the U.S. If the price fixing plan succeeded the two companies could have imposed higher rental rates on customers, according to the FTC in its draft complaint. (In Re U Haul International, Inc., File No. 081-0157).

In reaching a settlement, the respondent has agreed to comply with a proposed consent order, in force for 20 years, enjoining U-Haul from inviting a competitor to fix prices, divide markets or to allocate customers, or from discussing rental rates with any competitor. As is typical, the settlement and consent order do not constitute an admission that U-Haul violated the FTC Act or that the facts alleged by the FTC are true. The consent order is subject to public comment before the Commission makes it final.

According to the Commission, U-Haul’s chief executive officer urged employees to contact its competitor concerning pricing matters. In an intra-company memo, the CEO wrote:

     “Budget continues in some markets to undercut us on One-Way rates. Either get below them or go up
      to a fair rate. Whatever you do, LET BUDGET KNOW. Contact a large Budget Dealer and tell them.
      Contact their company store and let the manager know.”

At the same time, the executive urged U-Haul dealers to contact competing Budget dealers and urge them to match U-Haul’s higher rental rates.

In addition, during a public 2008 earnings conference call with industry analysts, the CEO spoke of U-Haul’s showing rate leadership in the industry and suggested that U-Haul will raise rates and would allow its competition “to come up a little bit” in price. The U-Haul officials on the call clearly expected Budget management to monitor the call and receive U-Haul’s pricing signal, according to the Commission. The U-Haul executive made extensive comments about Budget’s pricing practices in response to an analyst’s question for an update on pricing in the industry.