A company that had a de facto monopoly on tour bus service in Manhattan has agreed to pay a $7.5 million fine, and give up permits for 50 of its stops, including eight in Lower Manhattan. The company, Twin America, is largely unknown to Manhattan residents, because it is a partnership formed in 2009 by two former competitors, City Sights and Gray Line New York. The fleets of the two partner firms continued to operate as what appeared to consumers to be separate brands, but were actually a single entity, charging a single price, which they raised from $49 to $54 after joining forces, in spite of a recession. The joint venture had a 99 percent market share of the two million tourists who purchase tour bus tickets in Manhattan each year, the U.S. Department of Justice (DOJ) estimates, grossing more than $100 million per year.
Federal anti-trust litigators joined forces with the New York State Attorney General’s office, on the tail of a private sector suit was filed in 2013 by the litigation firm of Susman Godfrey. This antitrust, class-action suit was settled for $19 million in May, 2014. At the time of the settlement, Bill Carmody (the lead Susman Godfrey attorney on the case) said that state and federal anti-trust laws are, “intended to prevent exactly this situation — a sham joint venture between the two biggest head-to-head competitors in a market, explicitly formed to increase prices and reduce competition.” (How much of the $19 million payout will be disbursed to consumers who were harmed by the monopoly pricing power of Twin America, and how much will be retained by the lawyers who brought the suit, was not disclosed in the settlement announcement.)
Federal and state lawyers got involved with the avowed goal of dissolving the Twin America partnership, but had to settle for the $7.5 million fine (which will be split evenly between DOJ and the State Attorney General’s office) and an order compelling Twin America to surrender 50 of the City-issued permits that give it the right to pick up and drop off passengers near tourist attractions.
Because Twin America combined the accumulated permits of City Sights and Gray Line when the partnership was launched, the firm had a virtual lock on these valuable permits. This meant that other firms hoping to compete with it were unable to gain a foothold in the lucrative Manhattan tour bus industry.
Eight of these 50 stops are located south of Canal Street: four on Broadway (at Walker Street, Park Place, Vesey Street, and Wall Street); two on Water Street (at Wall Street and Fulton Street); another at South and Fulton Streets; and one more State Street and Battery Place.
But Lower Manhattan residents hoping that the settlement will have a beneficial effect on local traffic congestion (which is made worse by tour buses) may be disappointed. All 50 permits will simply be issued to other firms competing with City Sights and Gray Line, rather than being retired.