Online car rental service hit by monopoly probe
OFT tells Zipcar to pull over
The Office of Fair Trading has asked the Competition Commission to investigate whether Zipcar's takeover of Streetcar is likely to mean higher prices or reduced services for users in the UK.
Zipcar bought Streetcar in April, mainly for its strong UK presence.
They're both car rental clubs and are in the process of moving to Zipcar branding. Mobile applications and smartcards make it easy to find a car nearby and rent it for as short a period as an hour.
The regulator accepted that the greater scale of the merged firm provided advantages in terms of numbers of members, parking spaces and cars - all needed for future growth. But it had concerns about the ability of a newcomer to the market to compete, especially in London.
The OFT also recognised there was competition from other types of business like traditional car rental and other services, but not enough to fully allay its concerns.
The full OFT statement is here.
The Competition Commission is expected to report by 24 January 2011.
The merged firm is also planning an initial public offering - that might be delayed for the outcome of the Competition Commission investigation.®
Monopoly? Well I did always like to be the racecar...
It does sound like they'll pretty much have a monopoly over London's "car club scene" with 1000+ cars. But I can only see this as a positive thing, for an enterprise like this scale is only going to drive down costs, and as it stands the merger looks like it is already going to reduce prices for Streetcar users even if they will no longer solely be using sparkly new Volkswagens. Furthermore the availability of so many more cars in so many places and the increased likelihood of expansion into new markets (some in Newcastle and Durham would be appreciated!). Overall it seems like this will benefit consumers and while it may put its competitors at a disadvantage, I'm sorry that's business, second best is first loser.
Now where did I put my "Streetcard"...
If the OFT want to get involved fine, but considering there are other cities further north (in England at least, as yes I know they have one in Glasgow) than Bristol. Some competition round our way would be nice to see (seen as currently there's only citycarclub, which used to be whizzgo)