Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Senators Call for Review of the Impact of Past Airline Mergers, (Mar 1, 2013)

By Jeffrey May, J.D.

Senator Amy Klobuchar (D, Minnesota), chair of the Senate Judiciary Committee's Antitrust Subcommittee, and Senator Mike Lee (R, Utah), the subcommittee's ranking member, have asked the Departments of Justice and Transportation to conduct a thorough review of the impact of recent consolidation in the airline industry.

In a February 26 letter to Attorney General Eric Holder and Secretary of Transportation Ray LaHood, the senators asked for information on how past airline mergers have affected prices, service, fees, and mileage programs and whether the merged airlines have realized promised efficiencies.

The senators called for the review as part of the examination of the proposed American Airlines-US Airways merger, which was formally announced on February 14. The Senate antitrust subcommittee has scheduled a hearing to examine the merger on March 19.

The combination of American Airlines and US Airways would create the world's largest airline. It follows the 2010 merger of U.S. “legacy” carriers United Airlines and Continental Airlines. Two years earlier, the merger of Delta Air Lines and Northwest Airlines combined the nation’s third and fifth largest carriers.

The letter notes that consolidation in the airline industry has reduced the number of legacy carriers from six to four. It also points out that two of the largest low-cost carriers—Southwest Airlines and AirTran Airways—merged in 2011.

“As chair of the Senate Antitrust Subcommittee, I know how important competition in the airline industry is to help keep prices low for consumers without making cuts to service,” said Senator Klobuchar in announcing the letter and hearing. “That’s why I’m calling for a thorough review of the impact past mergers have had on the industry and I look forward to examining the merger at our hearing in the coming weeks.”

“As our Subcommittee reviews the proposed merger between American Airlines and US Airways, we have the benefit of learning how consumers fared in other, recent airline mergers,” said Senator Lee. “I look forward to reviewing these past transactions as we assess the likely effect of this merger on airline service and prices.”

The subcommittee hearing, entitled “The American Airlines/US Airways Merger: Consolidation, Competition, and Consumers,” will be held on March 19 at 10:00 a.m., in Room 226 of the Dirksen Senate Office Building.

News: Antitrust