Antitrust Law Daily Wrap Up, ANTITRUST—2d Cir.: Airline ticket distributorship claims fail to allege market power, adverse effect on competition, (Nov 19, 2015)

By Greg Hammond, J.D.

The federal district court in New York City properly dismissed claims that an airline tickets supplier illegally entered into exclusive distributorship arrangements in violation of the Sherman Act, the U.S. Court of Appeals in New York City decided in a summary order. In affirming the lower court’s dismissal, the appellate court concluded that the plaintiff failed to allege an actual adverse effect on competition or sufficient market power to adversely affect competition (Planetarium Travel, Inc. v. Altour International Inc., November 19, 2015, per curiam).

Planetarium Travel, Inc. a former franchisee of American Express Travel Related Services Company, Inc., filed suit against Altour International Inc., alleging that Altour engaged in an anticompetitive scheme to drive Planetarium out of Amex’s franchise network. This, according to Planetarium, amounted to an illegal exclusive distributorship in violation of the Sherman Act. The district court dismissed the claims and Planetarium appealed.

Antitrust injury. The appellate court affirmed the dismissal order, finding first that Planetarium failed to allege an actual adverse effect on competition. In particular, the court noted that exclusive distributorship arrangements are presumptively legal, but Planetarium failed to demonstrate how the arrangement in the instant action would impair competition for the sale of first class and business class airline tickets.

Market power. Planetarium also failed to sufficiently allege market power, the court concluded, noting that the complaint, at most, demonstrated that Altour is the thirteenth largest travel agency in the United States and American Express Travel was only recouping 9 percent of travel spending from its card members. These allegations, according to the court, gave no indication that the alleged market share gives rise to market power.

The case is No. 15-1161.

Attorneys: David DeToffol (DeToffol & Associates) for Planetarium Travel, Inc. Evan Shapiro (Skarzynski Black LLC) for Altour International Inc.

Companies: Planetarium Travel, Inc.; Altour International Inc.

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