Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: United, American, Delta airlines avoid injunction in price fixing suit, (May 17, 2016)

By Greg Hammond, J.D.

The federal district court in San Francisco has denied preliminary injunction in an action alleging that United Airlines, American Airlines, and Delta Air Lines conspired to fix the prices for air passenger transportation services on multi-city trips within the United States, in violation of the Sherman and Cartwright Acts (Prosterman v. Airline Tariff Publishing Co., May 13, 2016, Chesney, M.).

The complaint alleged that United Airlines, Inc., American Airlines, Inc., and Delta Air Lines, Inc. are the three largest commercial passenger airlines in the United States, purportedly controlling more than 70 percent of the market for U.S. passenger air travel. The three airlines conspired with Airline Tariff Publishing Co. (ATP), the plaintiffs asserted, by agreeing to increase the fares for domestic multi-city flights and no longer permit non-refundable fares for each leg of such flights, which resulted in the price for the multi-city itineraries, allegedly causing consumers to pay hundred and even thousands of dollars more for exactly the same flights.

The intent of the conspiracy, according to the plaintiff air travel passengers and travel agents, was to fix, raise, maintain, and/or stabilize prices for air passenger transportation services on multi-city trips within the United States, in violation of Section 1 of the Sherman Act. The passengers and travel agents brought the action under Sections 4 and 16 of the Clayton Act and Section 16750 of the California Cartwright Antitrust Act to prohibit the airlines and ATP from fixing and stabilizing airfares for multi-city air travel.

The agreement among American, United, and Delta to charge round-trip rather than one-way prices was a classic per se price fixing violation of the Sherman and Cartwright Acts, the plaintiffs’ memorandum in support of preliminary injunction argued. The plaintiffs asserted that they will continue to suffer irreparable harm in the absence of injunctive relief, because they and the travel agents’ customers have been deprived of the benefits of free and open competition in the sale of air passenger transportation services in the United States and they have paid, and will pay, monopoly prices for multi-destination flights as a result of the airlines’ combination and conspiracy.

The case is No. 16-cv-02017-MMC.

Attorneys: Joseph M. Alioto, Sr. (Alioto Law Firm) for Cynthia Prosterman. Daniel Murray Wall (Latham & Watkins LLP) for American Airlines, Inc. John C. Dwyer (Cooley LLP) for Airline Tariff Publishing Co. John F. Cove, Jr. (Boies Schiller & Flexner LLP) for Delta Air Lines, Inc.

Companies: American Airlines, Inc.; Airline Tariff Publishing Co.; Delta Air Lines, Inc.; United Airlines, Inc.

Cases: Antitrust CaliforniaNews