Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Both the U.S. and several states oppose the granting of certiorari in Northeast Alliance litigation, (May 29, 2025)

By Seth Abrams, J.D., M.A.

First Circuit upheld the district court’s application of rule of reason analysis.

The United States, along with several states, filed Briefs in Opposition with the Supreme Court in response to American Airlines Group, Inc.’s petition for certiorari. In their respective briefs, both the federal government and the group of states led by the District of Columbia argued that the Northeast Alliance (“NEA”) was properly enjoined by the district court and upheld by the First Circuit. They both argued that, contrary to American’s position, there are no circuit splits supporting review and review would have little practical effect (American Airlines Group, Inc. v. United States of America, No. 24-938 (U.S. May 27, 2025)).

Background. In July 2020, American Airlines and JetBlue Airlines, who had been fierce competitors in the Northeast, announced a joint venture known as the NEA, in which the two airlines would effectively operate as a single airline in operating flights to and from their Boston and New York hubs. The NEA was set to last for seven years and would continue indefinitely unless terminated by either party. In September 2021, the United States along with a bipartisan group of states filed suit to enjoin American and JetBlue from continued implementation of the NEA due to its alleged violation of Section 1 of the Sherman Act. After a lengthy trial, the district court applied the rule of reason and determined that the NEA violated Section 1 of the Sherman Act. In May 2023, the court issued its opinion enjoining the coordination of schedules, routes, or any effort to allocate markets. The carriers are also prohibited from entering into any agreement substantially similar to the NEA and must provide notice if entering into such arrangement. Shortly after the injunction issued, JetBlue exited the agreement. American, now the only remaining defendant, appealed the permanent injunction and its ban on similar agreements. The First Circuit affirmed the district court’s decision and order.

Questions presented. American Airlines filed a petition for a writ of certiorari with the Supreme Court in February 2025. In its brief in opposition, the United States framed the questions presented as: “1. Whether the court of appeals correctly held that respondents had established anticompetitive effects at step one of the rule-of-reason analysis by proving that the NEA had reduced output in multiple air-travel markets; [and] 2. Whether the court of appeals correctly held that the airlines had failed to meet their burden at step two of the analysis because they had not adequately proved that the NEA yielded procompetitive benefits.” The states argued that the question presented was whether the First Circuit properly affirmed the district court’s trial verdict based on its factual findings that “(1) the NEA caused significant anticompetitive harm, (2) the arrangement had no meaningful procompetitive benefits, and (3) any benefits the arrangement had were achievable though less anticompetitive means and were far outweighed by its harms.”

Rule of reason analysis. The rule of reason is applied using a "three-step burden-shifting framework," whereby (1) the party contesting a restraint must initially show a substantial anticompetitive effect; (2) if so, the burden shifts to the defendant to explain a "procompetitive rationale for the restraint"; and (3) if a procompetitive rationale is shown, it then falls upon the plaintiff to show that a less anticompetitive alternative is feasible, or that the restraint's benefits are outweighed by its harms to competition. Respondents argued that American is wrong to contend that the First Circuit created a lopsided split with other circuits at step one of the rule of reason. The district court had found that the NEA reduced output and consumer choice and eliminated competition between two of the biggest airlines in the Northeast. They assert that “[n]one of the cases American cites involved similar harms or remotely similar restraints.” Contrary to American’s contention, the NEA “warped competition” throughout the relevant market. On the second factor, the “shallow split” alleged by American is illusory. No proof of an anticompetitive effect is cited to by American.

Abandonment of NEA. Respondents argued that the court’s review is unwarranted because JetBlue has abandoned the NEA. The trial verdict rested on multiple alternative bases that “a ruling in American’s favor would not disturb.” As a result, and contrary to the assertions made by American, respondents argue that this case is a “poor vehicle” to resolve either question presented, as petitioner would likely derive “no practical benefit” even if it prevailed.

The Case is No. 24-938.

Companies: American Airlines Group Inc.; JetBlue Airlines

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