Recent events, marked by the European Commission's antitrust investigation in the ski equipment sector, serve as a potent reminder of the risks associated with anti-competitive practices. This operation, which led to "surprise inspections" at major players like Amer Sport (Atomic, Salomon) and Tecnica Group (Blizzard skis, Nordica, Moon Boot), is a clear warning for all markets, including car rental.
As a Revenue Manager, it is crucial to understand the dividing line between legitimate competitive intelligence and illegal collusion, and to integrate these imperatives into your Yield Management strategy.
The Golden Rule of Competition
European law (specifically Article 101§1) is very clear: any concerted practice or agreement whose object or effect is to prevent, restrict, or distort competition within the EU market is strictly prohibited.
What is Strictly Forbidden:
The danger lies in the exchange of sensitive information and direct agreements between car rental operators. Prohibited agreements include:
- Price fixing (agreements on rates, discounts, etc.).
- Market or customer allocation (quotas, reserved geographical areas).
- The exchange of data on costs or commercial strategies.
A simple conversation between competitors aimed at exchanging information on prices to "set a floor" is strictly illegal and common in many markets. Evidence of these offenses can be emails, secret meetings, or even unjustified similarities in behavior.
Rate Monitoring: A Legal Tool, But Never a Trigger
In the car rental industry, monitoring public prices is a well-established and efficient practice, thanks to technical operators like Dataseeker (WeYield's partner for scrapping), QL2, RateGain, and Fornova.
There is nothing wrong with checking your competitors' public prices, as long as those prices are freely disseminated. The fundamental difference lies in how you use that information.
The WeYield Recommendation: An Indefensible Pricing Process
To define your price in an optimal and compliant manner, WeYield recommends reversing the traditional order of decision factors. Rate monitoring should never be the trigger for a price change action, but a simple control tool.
Your Yield Management strategy must revolve around the following three elements, in this order:
- Available Capacity: Determine your actual capacity. Although car rental is one of the rare sectors where capacity is not fixed, it remains an essential criterion for Yield Management.
- Demand and Velocity: Evaluate actual and anticipated demand. Analyze opportunities and your velocity (acceleration or deceleration) to project your endpoint. This is where you decide whether to adjust your price or use other levers: optimizing distribution channels or brokers, relocating fleet, or launching a marketing action.
- Market Coherence (Control): After and only after your action is decided, check whether your new price remains coherent with your market. This verification is a simple control tool; any divergence can be assumed and justified by your own internal factors (capacity and demand).
The major advantage of this process is that it allows you to explain with clarity and confidence to a fraud enforcement inspector how your pricing decision was constructed, basing it on legitimate internal factors rather than the actions of your competitors.
WeYield has developed an automated price recommendation tool, Pricing Insights, which is entirely focused on performance indicators without taking into account competitors' price movements. Competitive monitoring serves only to check and adjust if necessary before final validation.
If you want to learn more, click to schedule a meeting.
References
Photo credit Kipras Štreimikis on Unsplash
