Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Airlines seek November trial date in U.S./state challenge to merger, (Aug 23, 2013)

By Jeffrey May, J.D.

US Airways Group, Inc. and AMR Corporation, the parent company of American Airlines, Inc., are seeking a November 12, 2013, start for the government’s trial challenging the proposed merger of the airlines. Yesterday, the companies filed a motion in the federal district court in Washington D.C. to set a trial date and a supporting brief. The defendants estimate that the trial will last 10 days (U.S. v. US Airways Group Inc., Case 1:13-cv-01236).

The government has called for a trial starting in February 2014. According to the airlines, the government’s 180-day schedule “is far longer than any of its other merger trials in this century.” The airlines suggest that a November date would afford the government a full 90 days following its complaint to prepare for trial.

Taking a page from the government's playbook, the airlines included a quote attributed to Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, in their motion. The government’s complaint included a number of quotes from US Airways executives—who would run the new American—that suggested that the merger was merely an attempt to deter aggressive competition in the industry.

In their motion, the airlines suggested that the government's trial was "unprecedentedly slow" in light of the government's 16-month investigation and Baer's reported assertion that “We don’t file lawsuits unless we’re prepared vigorously to defend them, and that’s what we’re doing right now.”

“The circumstances of the particular case, including American’s bankruptcy, present an unusually strong need for prompt resolution,” according to the airlines. The proposed merger presents the only extant plan of reorganization, it was asserted.

“We look forward to beginning this trial in November so we can complete our journey toward building the new American and deliver on the promise of this merger,” Tom Horton, AMR's Chairman, President and CEO, and incoming Chairman of the Board of the new American Airlines, said in an August 22 announcement.

“We are committed to resolving this litigation and, if necessary, will pursue all legal options in order to achieve this merger,” added US Airways Chairman and CEO Doug Parker, the incoming CEO of the combined company.

The U.S. Department of Justice, the States of Arizona, Florida, Pennsylvania, Tennessee, Texas, and Virginia, and the District of Columbia filed a complaint on August 13 in the federal district court in Washington, D.C., challenging the proposed $11 billion merger.

The government contends that the merger would have a particularly negative impact on competition for flights in and out of Ronald Reagan Washington National Airport. The complaint also contends that the transaction would be presumptively illegal in markets identified as more than 1,000 city pair markets in which American and US Airways currently compete head-to-head. Following the merger, there would be increased coordination among the remaining “legacy” airlines—Delta, United, and the new American—the government also alleged.

Attorneys: Richard G. Parker(O'Melveny & Myers LLP), Paul T. Denis (Dechert LLP), and Charles F. Rule (Cadwalader, Wickersham & Taft, LLP) for US Airways Group, Inc. John M. Majoras (Jones Day) and Mary Jean Moltenbrey (Paul Hastings LLP) for AMR Corp.

Companies: AMR Corp.; American Airlines, Inc.; US Airways Group, Inc.

News: Antitrust AntitrustDivisionNews