US Dept of Justice and New York Attorney General allege Twin America joint venture illegal and anti-competitive
Stagecoach is facing legal proceedings in the US challenging the legality of its New York tour bus joint-venture, Twin America.
The United States Department of Justice (DoJ) and the Attorney General of the State of New York (NYAG) have raised legal proceedings against Twin America alleging the joint venture was illegal and anti-competitive.
Twin America was set up as a joint venture in 2009, bringing together two competing tour bus operators, City Sights and Stagecoach North America's Gray Line New York.
The lawsuit claims regulatory approval was only sought from the national regulator, the Surface Transportation Board (STB), after the joint venture was agreed.
Twin America operates nine in every 10 of New York's sightseeing tour buses in a market estimated to be worth $100 million a year.
The STB subsequently ruled Twin America's dominant market position was anti-competitive and and gave the options of dissolution or offloading its interstate services, which would remove Twin America from the national regulator's jurisdiction.
Twin America discontinued its interstate services earlier this year in an effort to get the joint venture approved.
The lawsuit, filed in United States District Court in Manhattan on Tuesday, alleges the Twin America joint venture was set up illegally and with a view to eliminating competition and increasing profits, and had “ended the fierce competition” between the operators which had previously benefited customers.
The legal challenge adds Twin America used its monopoly position in New York to raise prices by 10 per cent.
Stagecoach said it “fundamentally disagrees” with the allegations and the assessment of the joint venture.
Stagecoach said in a statement: “Twin America and the joint venture parties have continued to work with the regulatory authorities with a view to reaching a resolution to the process in the interests of all parties.
“However, we do not believe all opportunities for a mutually satisfactory resolution have been fully exhausted. As a result, we are disappointed at the view taken by the authorities.
“We believe our proactive and constructive approach could have resulted in a proportionate and workable solution. It would have ensured the DoJ achieved its regulatory objectives and would also have supported continued healthy competition among New York sightseeing businesses.
“However, in view of the announcement by the DoJ and NYAG, the outcome is uncertain.
“The DoJ and the NYAG are seeking dissolution of the joint venture or, alternatively, divestiture of assets approximating the City Sights business that existed prior to the formation of the venture, including the City Sights brand, as well as an injunction against re-combining, equitable monetary relief, fees, costs and other relief as the court might order.
“Nevertheless, Twin America and the joint venture parties intend to robustly defend their position and will take all actions to protect their interests. Stagecoach will continue to keep the market updated as appropriate.”
Stagecoach North America holds 50 per cent of the voting rights and 60 per cent of the economic rights of the Twin America joint venture,which generated after-tax profits of £9 million for Stagecoach last year.