UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Department of Justice
1401 H Street, N.W., Suite 4000
Washington, DC 20530
CENTRAL PARKING CORPORATION,
2401 21st Avenue South
Nashville, Tennessee 37212,
ALLRIGHT HOLDINGS, INC.,
1313 Main Street
Houston, Texas 77002
| Civil No. CIV-99-00652
The United States of America, acting under the direction of the Attorney General of the
United States, brings this civil antitrust action to prevent the proposed merger between Central
Parking Corporation (Central) and Allright Holdings, Inc. (Allright).
I. NATURE OF THE ACTION
- The proposed merger would combine the two largest private parking management
companies in the United States, in terms of parking facilities, spaces, and parking revenues.
Central and Allright are two of only four parking management companies with a nationwide
presence. If the proposed merger is permitted, the merged firm would be much larger than any
rival. In many of the markets where Central and Allright now compete, market concentration
would increase substantially, and the merged entity would have a dominant market share.
- Central and Allright are direct and substantial head-to-head competitors in
providing off-street parking services to motorists (consumers) visiting the central business
districts (CBDs) of various cities in the United States. For example, in one such city, Nashville,
Tennessee, an Allright manager wrote that:
competition between Allright and Central is fierce and
all attempts by other majors to enter this market have failed. The
market is split between Allright and Central with both having ownership
in many high profile properties.
II. JURISDICTION AND VENUE
- Head-to-head competition between Central and Allright has benefited consumers
through lower prices and better services. The proposed merger threatens to end the "fierce
competition" between Central and Allright, in violation of Section 7 of the Clayton Act.
- This action is filed pursuant to Section 15 of the Clayton Act, as amended, 15
U.S.C. § 25, to obtain equitable relief to prevent a violation of Section 7 of the Clayton Act, as
amended, 15 U.S.C. § 18.
- Both Central and Allright sell off-street parking services to consumers within this
District, including to consumers who come from areas outside of this District. Defendants
purchase, for use in this District, substantial quantities of equipment, services, and supplies from
sources located outside of this District. In many states where defendants operate parking
facilities, the defendants make purchases of equipment, services, and supplies across state lines.
Hence, the provision of parking services by Central and Allright is an activity that substantially
affects and is in the flow of interstate trade and commerce. Accordingly, this Court has
jurisdiction over the subject matter of this action and jurisdiction over the parties pursuant to 15
U.S.C. §§ 22 and 25, and 28 U.S.C. §§ 1331 and 1337.
- Venue in this District is proper under 15 U.S.C. § 22 and 28 U.S.C.
IV. THE PROPOSED MERGER
- Central is a Tennessee corporation headquartered in Nashville, Tennessee.
Central provides off-street parking services to consumers in the United States and other
countries. It is the largest company offering such services in the United States, in terms of the
number of parking facilities, the number of parking spaces that it controls, and the revenues
generated from parking services. Central operates more than 2,400 parking facilities containing
more than a million spaces. Its portfolio of parking facilities includes owned, leased and
managed properties. In fiscal year 1997, Central had revenues of $222,976,000.
- Allright is a privately held Delaware corporation headquartered
in Houston, Texas, and also provides off-street parking services to
consumers in the United States. Allright is currently 44.5 percent
owned by Apollo Real Estate Investment Fund II, L.P., 44.5 percent
owned by AEW Pat6tvb rrtners L.P., 9.1 percent owned by management,
and 1.9 percent owned by certain financial advisors to Apollo and
AEW and one member of the previous Allright management team. Allright
is the second largest parking company in the United States in terms
of number of parking facilities, number of parking spaces, and revenues
generated from parking services. Allright operates more than 2,300
parking facilities containing nearly 600,000 spaces. Like Central,
its portfolio of parking facilities includes owned, leased and managed
properties. In fiscal year 1997, Allright had annual revenues of $178,637,000.
- On or about September 21, 1998, Central and Allright entered into a merger
agreement whereby Allright will become a wholly owned subsidiary of Central which will
continue as the surviving entity in name and structure. Current Central shareholders will own
approximately 80 percent of Central's common stock, and current Allright shareholders will own
approximately 20 percent of Central's common stock. The value of the proposed merger at the
time it was announced was approximately $585 million.
V. TRADE AND COMMERCE
A. The Relevant Product Market
- The appropriate relevant product market in which to assess the likely
anticompetitive effects of the proposed merger is the provision of off-street parking services.
- Consumers drive their vehicles to the CBDs of cities for work, business, shopping
or entertainment. Off-street parking facilities are the primary type of location at which they may
leave their vehicles while they are in the city. These parking facilities generally are open lots,
free-standing garages, or parking garages located within commercial or residential buildings.
- Each defendant offers consumers off-street parking services at facilities that it
owns, leases, or manages. When a defendant owns or leases a parking facility, it is the
proprietor of the business and sets the conditions of operation, including prices. When a
defendant manages a parking facility for an entity that owns the facility, the defendant
recommends conditions of business operation, including prices. Often, in such managed parking
facilities, the incentives of a defendant are the same or similar to those of the owner to maximize
profits as to nontenant or transient consumers.
- Off-street parking services are commonly offered to consumers on the basis of
monthly, daily, hourly, and less-than-hourly prices. In addition, such services are frequently
offered to consumers at special prices for lower demand times, including "early bird," evening,
and overnight prices.
- On-street parking is generally not a practical substitute for off-street parking
services. Off-street parking facilities provide many advantages over parking on the street. For
example, off-street parking facilities allow consumers to select a level of service (e.g., self-parking, valet), a feature not available with on-street parking. Off-street parking facilities often
provide consumers relative certainty about availability of suitable parking and the location and
time that it will be available. Off-street parking also offers consumers greater security for their
vehicles. In addition, consumers often can leave vehicles in an off-street parking facility as long
as desired without the need to move them or "feed the meter," thereby eliminating the risk that
the vehicles will receive parking tickets. Furthermore, in the case of a garage, the vehicles are
sheltered from the elements, a feature not available with on-street parking.
- In most CBDs, on-street parking is available only in small quantities and the
prospect that motorists would switch to on-street parking is unlikely to affect significantly
pricing decisions of managers of off-street parking facilities.
- The possibility of traveling to a CBD by public transportation is not likely to be a
significant constraint on pricing decisions of managers of off-street parking facilities.
Consumers who decide to drive to the CBD rather than take public transportation do so for a
variety of reasons and are unlikely to switch in significant numbers to public transportation as a
result of a small change in the price of off-street parking.
- The provision of off-street parking services is a relevant product market (i.e., a
"line of commerce") within the meaning of Section 7 of the Clayton Act.
B. The Relevant Geographic Markets
- The appropriate relevant geographic markets within which to assess the likely
anticompetitive effects of the proposed merger are no larger than CBDs of cities or smaller areas
- Competition among off-street parking facilities occurs in CBDs and smaller areas
within the CBDs of cities across the United States. Defendants' managers make pricing
decisions for each facility based on market conditions within a few blocks of that facility.
- For convenience, motorists park near their destination, typically within a few
blocks. Consumers faced with a small but significant increase in parking prices near their
destinations would not turn to more distant parking facilities in sufficient numbers to render the
price increase unprofitable.
- The CBDs or smaller areas contained therein, of the following cities: (1)
Cincinnati and Columbus, Ohio; (2) Nashville, Knoxville, and Memphis, Tennessee; (3) Dallas,
Houston, El Paso, and San Antonio, Texas; (4) Baltimore, Maryland; (5) Denver, Colorado; (6)
Jacksonville, Tampa, and Miami, Florida; (7) San Francisco, California; (8) Kansas City,
Missouri; (9) New York, New York; and (10) Philadelphia, Pennsylvania, constitute relevant
geographic markets (i.e., "sections of the country") within the meaning of Section 7 of the
VI. UNLAWFUL COMPETITIVE EFFECTS
- Central and Allright are direct and substantial competitors in offering off-street
parking services to consumers. Central and Allright compete on the prices charged to consumers
and on the terms and conditions and other services offered to consumers, including hours of
operation, the mixture of parking options offered (e.g., monthly contracts, "early bird" or evening
specials), cleanliness of facilities, and the skill, efficiency and courtesy of staff.
- Central and Allright establish, either unilaterally or in cooperation with the
owners of the parking facilities, parking prices and terms and conditions of services in order to
attract consumers to their facilities and to maximize the profitability of their various parking
facilities. Generally, prices and services are established on a location-by-location basis. In
determining prices and services, the defendants take into consideration a variety of factors,
including the prices charged by competing firms in the geographic market in which the facility
operates and other local market conditions, including the demand for off-street parking and the
availability of other off-street parking locations.
- In the relevant geographic markets identified in Paragraphs 18-21 of this
Complaint, the proposed merger threatens substantial and serious harm to consumers. The
proposed merger would substantially increase Central's market shares in the relevant markets,
and it would place in Central's hands substantial control over prices and services available to
VII. ENTRY CONDITIONS
VIII. VIOLATION ALLEGED
- Creation of new parking spaces in CBDs is largely a by-product of other
decisions, e.g. to build or tear down a building, that are not directly related to the demand for, or
changes in the price of, parking services. The creation of a significant number of new parking
spaces is unlikely to be timely, likely, and sufficient to prevent anticompetitive effects from the
merger in each of the affected markets.
- The proposed merger between Central and Allright is likely substantially to lessen
competition in interstate trade and commerce, in violation of Section 7 of the Clayton Act, 15
U.S.C. § 18.
- The effect of the proposed merger, if consummated, may be the substantial
lessening of competition in the relevant markets by, among other things:
- eliminating Allright as an effective independent competitor of Central in
the sale of off-street parking services;
- eliminating or reducing substantial actual and potential competition
between Central and Allright for the sale of off-street parking services; and
- providing Central with the ability to exercise market power by raising
prices or reducing the quality of services offered for off-street parking
IX. REQUESTED RELIEF
- The plaintiff respectfully requests: (a) an adjudication that the
merger of Central and Allright would violate Section 7 of the Clayton
Act; (b) permanent injunctive relief preventing the consummation of
the proposed merger of Central and Allright as expressed in their merger
agreement dated on or about September 21, 1998 or any agreement, understanding
or plan, the effect of which would be to combine the businesses or assets
of Central and Allright; (c) an award to the United States of the costs
of this action; and (d) such other relief as is proper.
Dated: March , 1999
Joel I. Klein
Assistant Attorney General
Donna E. Patterson
Deputy Assistant Attorney General
Susan M. Davies
Constance K. Robinson (202) 307-0001
Director of Operations &
Craig W. Conrath, Chief
Reid B. Horwitz, Assistant Chief
Merger Task Force
Allee A. Ramadhan (162131)
John C. Filippini (165159)
Joseph Miller (439965)
Merger Task Force
U.S. Department of Justice
1401 H Street, N.W.
Washington, D.C. 20005