San Diego academic institution criticizes rental firms

The Center for Public Interest Law, affiliated with the University of San Diego, in California, has decided to take seven major car hire firms to court, because it contends that these companies have engaged in price fixing. The companies mentioned in the lawsuit include Avis, Dollar, Enterprise and National, as well as three local organizations. According to a report in the Sacramento Bee, the law school is claiming that these car hire firms took advantage of a change in a piece of state legislation in 2006, which allowed rental companies to quote a 9% airport concession fee, added to all car hires, separately from the base price of a rental. As such, the initial price that a customer is quoted is always lower than what he/she will ultimately pay. Many analysts believe that this change was advantageous for rental firms and in exchange, the companies were required to contribute $24 million to help California develop its tourism industry.

The law school claims that seven rental firms have added a 2.5% surcharge on top of rentals, in order to help cover the cost of this $24 million tourism fund contribution. Additionally, this academic institution has also alleged that the firms have failed to reduce their rates by 9%, even though this concession fee is now calculated separately and added to the total amount payable. Robert Fellmeth, the Centre’s director, believes that this suggests “price-fixing” and “anti-competitive behaviour” on the part of these companies.

Enterprise Rent-a-Car, one of the companies cited in the lawsuit, strongly denies all allegations of price-fixing, noting that these claims are “without merit.”

www.enterprise.com