Zipcar-Streetcar Merger Probed
Zipcar, the world’s largest US-based car sharing company, is set to be investigated by the Competition Commission over their acquisition of Streetcar, the British company. In April, privately-owned Zipcar bought Streetcar in a transaction worth around US$50 million, and the deal has formally been completed.
However, the Office of Fair Trading, the UK consumer affairs watchdog, says that the merger could threaten competition. They believe that new car club operators will have a hard time entering the London market due to the merger of these two companies, as they will have an edge with their combined network of cars, available parking spaces and number of members. They also say that other forms of transport won’t be sufficient competition to prevent the merged companies from reducing services and increasing prices in the future.
Amelia Fletcher, the senior director of mergers for the Office of Fair Trading, says that the fact that the market is flourishing means that it’s important to protect existing competition. The merger will bring 2 of the largest and most closely competing car clubs in London together, she explained.
The probe by the Office of Fair Trading started in June and put the integration of Zipcar’s and Streetcar’s operations on hold. The Competition Commission is now expected to report on their investigation by January 24 next year, during which the two companies will continue operating separately.
Zipcar chairman and chief executive Scott Griffith said that he is disappointed with the decision, but will fully comply with the regulators. They will continue their service levels and car availability like they always have, he added.
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