Antitrust Law Daily Wrap Up, ANTITRUST NEWS: American Antitrust Institute applauds challenge to American/US Airways deal, (Aug 14, 2013)
Organizations Mentioned:AMR Corp. | American Airlines, Inc. | American Antitrust Institute | U.S. Department of Justice | US Airways Group, Inc.
By Peter Reap, J.D., LL.M.
The American Antitrust Institute (AAI) announced yesterday that it applauds the lawsuit initiated that same day by the U.S. Department of Justice, six state attorneys general, and the District of Columbia, to halt the possible merger of US Airways and American Airlines’ parent corporation, AMR Corp. based on the risk of decreased competition and higher prices for air travelers. In the complaint challenging the proposed $11 billion merger, filed in the federal district court in Washington, D.C., the Justice Department Antitrust Division—together with the States of Arizona, Florida, Pennsylvania, Tennessee, Texas, and Virginia, and the District of Columbia—is seeking to block the planned merger of two of the nation’s five major airlines. The plaintiffs include the home states for both carriers.
The lawsuit to halt the merger falls on the one year anniversary of the release of a jointly produced White Paper by the AAI and Business Travel Coalition that reviewed the competitive issues raised by a possible merger of US Airways and American Airlines.
The White Paper, which was sent to the Department of Justice in August 2012, indicates that a merger between US Airways and American could: substantially reduce competition on a number of routes, create regional strongholds at key airports across the country, and starve smaller communities of important air service.
According to the White Paper, the proposed merger “would occur against an industry backdrop marked by a dwindling fringe of low-cost carriers (LCCs) and growing questions as to whether legacy look-alike Southwest Airlines-AirTran Airways (Southwest) exerts any significant competitive discipline in the industry. The merger could therefore hasten a troubling metamorphosis of the domestic airline industry from one in which hub airports were designed to accommodate multiple, competing airlines to a few large, closed systems that are virtually impermeable to competition and create a hostile environment in which LCCs and regional airlines have difficulty thriving and expanding.”
“A US Airways-American combination poses potential concerns for competition and consumers,” explained Diana Moss, Vice President of the AAI who testified before the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights during the Committee's hearing “The American Airlines/US Airways Merger: Consolidation, Competition, and Consumers" on March 19, 2013.
Companies: AMR Corp.; American Airlines, Inc.; US Airways Group, Inc.
News: Antitrust