Prior to 2009, there were two tour bus operators in town: City Sights and Gray Line New York, the latter of which was operated by Coach USA. Stiff competition between the two companies meant lower prices for consumers. City Sights managed to obtain a sizeable portion of the market share by offering discount rates. The relentless competition was, at least legally, the ideal situation.
Of course, all that competition meant less profits for Coach USA, reports Reuters. In 2008, the larger company initiated discussions about an alternate arrangement. In 2009, the two companies created a joint venture: Twin America LLC. Prior to the merger, the two controlled 99 percent of the market. No other company has challenged them since. Profits are split 60-40 in Coach USA's favor.
What did this mean for customers? A $5 (or ten percent, approximately) price hike.
The amount of business the now-monopoly does is staggering - $100 million per year. An estimated 2 million tourists take the double-decker tour busses annually, out of 50 million total tourists.
Now, a lawsuit brought by the Department of Justice and the New York Attorney General’s Office is seeking to have the joint venture dissolved, and to have competition restored.
Business arrangements, such as Twin America, implicate a number of state and federal laws that prohibit monopolies and illegal restraints on trade, such as the Sherman Anti-Trust Act and the Clayton Anti-Trust Act. The justification behind the laws is obvious - having competition protects consumers by ensuring fair and honest pricing and better service. If one company raises prices or lowers service, the other company profits. If there is only one company in existence, there is no restraint on their ability to abuse consumers.
Though the Sherman and Clayton Acts empower the government to seek criminal and civil sanctions against companies holding a monopoly in a single industry, criminal sanctions are rarely sought. Instead, civil lawsuits, like the one filed in the present case, seek to remedy the situation, usually through heavy fines or splitting of the company.
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