NYC’s Monopolistic Hop-On, Hop-Off Tour Bus Companies To Pay Back $19M To Tourists

(Adam Fagen)

Sometimes working together is better than going it alone. That is, unless you collude with your competition to form a monopoly. In which case you’re probably going to slapped with lawsuits, and a hefty fine. Such was the case for a group of tour bus companies in New York City that have agreed to pay $19 million to settle antitrust claims.

For decades, Coach USA’s Gray Line sightseeing buses were the dominant player in New York City bus tours. Then in 2005, a competitor called CitySights came into the market and began chewing away at Gray Line’s market share.

This competition resulted in reasonable (but still kinda high) prices for tourists, as they could choose between the two bus company options, preventing both Gray Line and CitySights from jacking up their rates.

And so in 2009, the two companies created a joint venture called Twin America LLC, which would operate both the Gray Line buses and the CitySights buses, though both those brands would continue on, giving the illusion of competition.

The new company thus controlled 99% of the sightseeing bus business in NYC, and a non-compete agreement signed by all parties meant that neither of the brands could try to undercut the other on pricing.

Several class-action civil suits accused the hop-on, hop-off tour companies of forming a joint venture to illegally monopolize the sightseeing bus industry and conspiring to fix prices above market rate,

Today, The New York Daily News reports that the bus companies settled those class-action claims, meaning that around 4 million sightseers who bought hop-on, hop-off tour tickets since Feb. 1, 2009 could be eligible to claim part of the $19 million settlement.

The settlement must be approved by a judge before it becomes final.

Still unresolved is the 2012 antitrust complaint [PDF] filed by the NY state Attorney General. That case is still pending and is slated to finally go to trial later this year.

“This lawsuit is an important step toward restoring competition and protecting tourists in New York City,” NY AG Eric Schneiderman said in a Justice Department news release at the time of the lawsuits filing. “The iconic double-decker Gray Line and City Sights buses are seen all over New York City but few people know they are run as a monopoly. The formation of Twin America has meant higher prices and less competition. Tourists who come to the Big Apple deserve better.”

Hop on this deal: Tour bus companies agree to $19 million settlement in lawsuit [New York Daily News]

by Ashlee Kieler via Consumerist