On Aug. 12, the AAntitrust Division of the U.S. Department of Justice joined with the attorneys-general of six states and the District of Columbia to file a lawsuit to stop the merger of AMR, which owns American Airlines, into U.S. Airways. You can see the complaint here.
The filing took Blawgletter by surprise. Living in DFW, which AMR calls home, we’ve watched and read a lot of cheerleading in the local paper and TV stations about the awesome combo. It reached a crescendo in the last couple of weeks with the vote by stakeholders in the AMR bankruptcy for closing on the deal. We can’t recall any warning bells about a possible blocking action by our friends at the Division.
But it looks serious. The Complaint doesn’t carp about locking up a measly dozen or so “city-pairs” (a term that antitrust lawyers use for air routes from City A to City B and vice versa). No. Like Davy Crockett, a hero of the Alamo, it goes the whole hog. It says the impending marriage would cause great harm by taking the number of “legacy” air carriers in the U.S. to three from four, making collusion — both the express and tacit kinds — easier to practice and more profitable. It goes on to list an entire 14 pages of city-pairs. And, in a wrong-but-spooky touch, it implies that the merger must “be approved” by the district court before it can go through. Plus the Texas Attorney General, who loves to boast about suing the federal government, has joined the feds in the civil suit.
These people mean business.
Some will wonder, by the way, why the Antitrust Division wants to halt the U.S. Airways-AMR hookup but let Delta and Northwest and Continental and United join forces in 2008 and 2010, respectively, without much of a peep. Well, you have to start somewhere. Stopping the consolidation before the Final Four become the Thuggish Three or even the Terrible Two makes sense.