Antitrust Law Daily Wrap Up, ANTITRUST NEWS: American Airlines, Orbitz Agree to Settle Antitrust Dispute, (Apr 1, 2013)

By Tobias J. Gillett, J.D., LL.M.

American Airlines, Inc. and online travel agency Orbitz Worldwide, LLC have reached an agreement settling American’s antitrust claims against Orbitz over its alleged participation in a group boycott by travel industry members. The travel industry members allegedly conducted the boycott to retaliate against American for introducing its AA Direct Connect method of providing airline booking services.

In April 2011, American filed an antitrust complaint in the federal district court in Fort Worth, Texas, against Orbitz and global distribution system (GDS) operator Travelport for Sherman Act violations. American added GDS operator Sabre Holdings as a defendant in June 2011.

Travelport and Sabre distribute airline fare, flight, and availability information to travel agents, enabling those travel agents to make reservations and issue tickets to travelers. Airlines provide their information to GDS operators and pay each operator a booking fee for every reservation that is made through the systems. AA Direct Connect provides airline information and booking services directly to travel agents without them having to go through the global distribution system operators.

In its complaint, American alleged that Orbitz, Sabre, and Travelport had engaged in an “industry-wide conspiracy” to exclude American’s AA Direct Connect from the market for the distribution of airline fare, flight, and availability information and the provision of booking services to travel agents. Orbitz had a Subscriber Services Agreement with Travelport that required it to use Travelport exclusively as its GDS provider for North American air travel bookings. Orbitz also had an agreement with American that allegedly required it to “maximize its use of an older direct connect technology, and to cooperate with American to develop and implement newer direct connect technologies.”

According to American, Orbitz entered into an agreement with Travelport without American’s knowledge that prohibited it from using an American direct connection system. Orbitz then breached its agreement with American by refusing to implement American’s new direct connection system, and American terminated their relationship. Travelport entered into an agreement with Orbit that would offset any of Orbitz’s lost profits, “conditioned only on Orbitz’s continued refusal to adopt AA Direct Connect.”

American alleged that Orbitz and Travelport took these actions in concert with other actions by travel industry participants designed to punish American for seeking to introduce AA Direct Connect, including Sabre’s and Travelport’s doubling of American’s booking fees and their misrepresentations regarding American’s flight and fare information to travel agents and the public. In August 2012, the federal district court denied motions to dismiss American’s Sherman Act lawsuit (2012-2 Trade Cases ¶78026).

According to a joint press release by Orbitz and American, the companies’ agreement “resolve[s] all litigation between them,” although it requires approval by the bankruptcy court overseeing the restructuring of AMR Corporation, American’s parent company. The companies have not provided other details regarding the agreement at this time. American previously announced the settlement of its claims against Sabre on October 31, 2012, and its claims against Travelport on March 13, 2013.

Companies: Orbitz Worldwide, LLC; American Airlines, Inc.

News: Antitrust