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Antitrust Enforcers Seek To Slam On The Brakes On NYC Tour Bus Joint Venture

Posted  January 7, 2013

New York City tourists could see lower prices for “hop-on, hop-off” bus tours if the U.S. government and the State of New York succeed in an antitrust suit filed in the U.S. District Court for the Southern District of New York that seeks to break up a joint venture that has allegedly monopolized the market.

The U.S. Attorney General and New York State Attorney General are suing in U.S. v. Twin America LLC to obtain equitable relief against bus companies Coach USA and CitySights, and their joint venture, Twin America, LLC.

Coach and CitySights operate several tour routes in New York City that allow tourists to stop at popular attractions, like Times Square or the Empire State Building, as well as in neighborhoods, like Chinatown or Soho.  Coach and CitySights provide a flexible way for visitors to explore New York because they allow riders to get off and spend as much time as they want at an attraction before boarding the next bus driving along the route.

According to the complaint, the two companies viciously competed against each other for almost four years.  CitySights began operations in 2005, and through several public advertising campaigns, grew quickly as a business.  As CitySights expanded, Coach saw its profits and market share decrease.

After three years of matching and attempting to outdo each other’s deals, Coach allegedly approached CitySights and proposed a joint venture to provide greater “pricing flexibility” for both companies.  Without first seeking approval for the joint venture from the federal Surface Transportation Board, the companies formed Twin America in 2009.  They continued operations as two separate companies, however, so the “competition could be kept at bay.”

The complaint alleges that the joint venture is an effective merger to monopoly that controls 99 percent of the market for hop-on, hop-off bus tours in New York City.  The complaint also alleges that the joint venture has resulted in actual anticompetitive effects, including a 10 percent price increase adopted by both companies.  The most popular tour went from $49 per person to $54.

Tagged in: Antitrust Litigation, Monopolization,