August 8, 2012 9:28 pm

Dollar Thrifty/Hertz: FTC staff hold meeting, results unclear

This article is provided to FT.com readers by PaRR (Policy and Regulatory Report)— a newly launched product of The Mergermarket Group providing proprietary intelligence and research on competition law and sector-specific regulatory changes around the world. www.parr-global.com

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Federal Trade Commission (FTC) staff held a meeting on 23 July to discuss Hertz Global Holdings’ (NYSE:HTZ) possible merger with Dollar Thrifty Automotive Group (NYSE:DTG), a source and person familiar with the matter told PaRR.

There has been a recommendation made to the antitrust regulator’s commissioners, said the source, but it could not be learned what the nature of the recommendation was or which FTC bureau made the recommendation. However, the person claimed the meeting did not result in a formal consensus recommendation going up to the commissioners.

This news service has previously reported that the FTC may be satisfied by a remedy package that calls for Hertz to divest its Advantage rental car brand as well as certain airport locations.

The news of progress at the FTC comes as investor speculation swirls as to when a deal between Hertz and Tulsa, Oklahoma-based Dollar Thrifty might be inked. The two rental car companies have been in on-and-off merger talks for more than two years as they wait to see if antitrust regulators will clear a deal.

The FTC staff appears to be still having discussions about Hertz and Dollar Thrifty, said the person, who noted it is a complex transaction and the FTC staff has multiple constituencies, including the bureau of competition and the bureau of economics as well as attorney advisors from the individual commissioners’ offices. These groups have different questions and perspectives, the person said, who added that this was not worrisome from the parties’ perspective.

The source said an “attorney panel” consisting of representatives from the individual commissioners’ offices is conducting its own fact-finding mission. Since the July meeting there does not appear to have been any communication between the FTC and the parties involved in the transaction, the source said, declining to elaborate further.

It was the opinion of the source that, generally speaking, the review has slowed in recent weeks as a mid-August malaise has set in at the FTC.

A recommendation is often the penultimate hurdle for a review to overcome before formal antitrust clearance is achieved from the FTC.

Typically, staff attorneys and economists send up separate recommendations to the commissioners, said a former FTC attorney. He said the attorneys often have more sway than the economists within the FTC.

“The balance is in favor of the Competition Bureau and the legal evidence of a case,” said the attorney.

The commissioners typically take one to three weeks to vote on a deal and rarely oppose a staff recommendation directly.

Still, as it stands now the commissioners will be considering a remedy package that appears to be contingent on a yet-to-be agreed to deal, a prospect that is uncommon at the FTC. The source said the FTC has not provided guidance as to what its plan may be.

Mark Frissora, CEO of Hertz, has made public comments that suggest he wants some form of regulatory approval in hand before approaching Dollar Thrifty. On a May 1Q earnings call, the executive said: “We have made substantial progress towards our goal to obtaining antitrust clearance that would allow us to consider the terms on which we might move forward with that acquisition.”

Recent media reports have named U-Save, a subsidiary of Canada-based Franchise Services of North America (CVE:FSN), as the divestiture buyer. Representatives of U-Save and FSN did not immediately return requests for comment.

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