L
LequteMan
Guest
The U. S. Justice Department, along with the attorneys general of six states and the District of Columbia, filed a lawsuit on Tuesday, 13th of August, 2013 seeking to block the proposed merger ofAmerican Airlines and US Airways.
The Justice Department said the deal would substantially reduce competition for “commercial air travel in local markets throughout the United States and result in passengers paying higher air fares and receiving less service” if it succeeded.
The $11 billion merger which was announced in February, took American out of bankruptcy. The union would create the nation’s biggest airline, big enough to compete against United Airlines and Delta Air Lines, which are currently the biggest domestic carriers.
But in the complaint filed on Tuesday in Federal District Court in the District of Columbia, the Justice Department said the merger “will leave three very similar legacy airlines – Delta,United and the new American — that past experience shows increasingly prefer tacit coordination over full-throated competition.”
The complaint goes on, “By further reducing the number of legacy airlines and aligning the economic incentives of those that remain, the merger of US Airways and American would make it easier for the remaining airlines to cooperate, rather than compete, on price and service.
US Airways stock was down 7 percent in trading after the suit was filed.
The action is the latest in a series of prominent antitrust moves by the Obama administration Justice Department. In January, the agency sought to block Anheuser-Busch InBev’s $20.1 billion acquisition of Grupo Modelo, the Mexican maker of Corona beer (that deal was later modified to win approval), and in 2011 it thwarted AT&T’s proposed $39 billion takeover of T-Mobile USA. (Those companies abandoned the merger.)
The Justice Department said the deal would substantially reduce competition for “commercial air travel in local markets throughout the United States and result in passengers paying higher air fares and receiving less service” if it succeeded.
The $11 billion merger which was announced in February, took American out of bankruptcy. The union would create the nation’s biggest airline, big enough to compete against United Airlines and Delta Air Lines, which are currently the biggest domestic carriers.
But in the complaint filed on Tuesday in Federal District Court in the District of Columbia, the Justice Department said the merger “will leave three very similar legacy airlines – Delta,United and the new American — that past experience shows increasingly prefer tacit coordination over full-throated competition.”
The complaint goes on, “By further reducing the number of legacy airlines and aligning the economic incentives of those that remain, the merger of US Airways and American would make it easier for the remaining airlines to cooperate, rather than compete, on price and service.
US Airways stock was down 7 percent in trading after the suit was filed.
The action is the latest in a series of prominent antitrust moves by the Obama administration Justice Department. In January, the agency sought to block Anheuser-Busch InBev’s $20.1 billion acquisition of Grupo Modelo, the Mexican maker of Corona beer (that deal was later modified to win approval), and in 2011 it thwarted AT&T’s proposed $39 billion takeover of T-Mobile USA. (Those companies abandoned the merger.)
