Tuesday, July 28, 2009

More on Alliances and Antitrust

The Wall Street Journal's Law Blog has a new commentary up on the New York Times article referenced earlier this week, see previous post here, concerning the Department of Justice's new stance on robust antitrust enforcement and the political resistance it is receiving.  See Ashby Jones's Post to the WSJ Law Blog, Varney Getting Pushback on Aggressive Antitrust Agenda (July 27, 2009) (available here).  The Journal is also reporting that House Transportation Committee Chairman James Oberstar is "stepp[ing] up efforts to limit airlines' ability to join alliances that cooperate on schedulingand revenue sharing, urging the White House to review antitrust policies."  Josh Mitchell, Lawmaker Seeks Air-Alliance Curbs, Wall St. J., July 28, 2009 (available here).  As the articles goes on to state:

Rep. James Oberstar (D., Minn.) sent a letter Monday to Lawrence Summers, director of the National Economic Council, expressing "deep concern over the decline of airline competition in international markets." He said three global alliances -- Star, Sky Team and oneworld -- now control more than 87% of traffic between the U.S. and Europe, hurting consumers.

Mr. Oberstar urged a "sunset" on exemptions to antitrust laws that have allowed U.S. airlines to join the alliances.

Rep. Oberstar's sunset proposal has been discussed previously on the blog.  See earlier posts here, here, and here.  It's not surprising that following the recent decision of the Department of Transportation to grant (almost full) antitrust immunity to Continental's application to join the Star Alliance he would choose to again raise his concerns with the Administration.  He has not been shy about characterizing the alliances as examples of collusive arrangements which harm consumers.  See, e.g., Letter from Rep. James Oberstar to Christine A. Varney, Asst. Attorney General (July 8, 2009) (available here).  Yet for all his high-octane numbers intended to demonstrate unprecedented and anticompetitive market dominance by Star, oneworld, and SkyTeam (e.g., that they account for 80% of the world's airline capacity, 78% of world revenue passenger kilometers, and 87% control of U.S./European air traffic), see id. at 2, he has not provided empirical data demonstrating actual consumer harm from these arrangements.  Oberstar is also committed to maintaining the U.S.'s outmoded foreign ownership and control rules for airlines, thus preventing the consummation of transnational mergers.  What alternative, then, is left to the airlines as they seek to remain viable in a tough operating environment by offering transnational network benefits and enhanced loyalty programs to consumers?  That, too, appears absent from the Congressman's assessment of the current international aviation marketplace.

http://lawprofessors.typepad.com/aviation/2009/07/wsj-law-blog-on-the-new-antitrust-policy.html

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