Wednesday, August 5, 2009

Horan Responds on the Law of Antitrust Immunity

In response to a blog post from earlier this week, "The Law of Antitrust Immunity for Alliances," airline analyst Hubert Horan, whose guest post concerning consolidation in the transatlantic aviation market from last week makes for an engaging read, brought the following excerpt from the recently approved Star Alliance application to our attention:

[The Department of Justice's] Comments provide no basis to turn back the clock on a successful two-decade U.S. international aviation policy . . . .  Our nation's trading partners, both present and future, have relied on, and will rely on, the continued availability of ATI [antitrust immunity] as the cornerstone of U.S. aviation policy.  For example, the U.S.-EU Agreement negotiations included a Memorandum of Consultations that specifically promised prompt action on applications for expanded immunity such as that sought by the Joint Applicants here[.] . . . Thus the Memorandum of Consultations is an acknowledgement of the aeropolitical reality that open skies and ATI are integrally linked and essentially refutes the DOJ's position that the Joint Application is not linked to open skies benefits. DOJ would have the Department renege on that promise.

[F]or the Department to deny or modify its tentative decision risks sending a message to the world of a sea change in U.S. aviation policy.

Joint Application to Amend Order 2007-2-16, Dkt. No. OST-2008-0234, Response of the Joint Applicants to the Department of Justice (July 6, 2009), at 7-9.

According to Horan, a careful parsing of language shows that the Star Alliance wasn't directly arguing that the EU-U.S. Treaty supercedes the U.S.'s antitrust review processes, but they are doing their best to link the treaty to a U.S. commitment to pro forma approval of any ATI application that anyone might propose. They are also trying to conflate Transportation Department policy with treaty obligations, i.e., the treaty and policy require approval, therefore the DOJ evidentiary objections are irrelevant.  It appears that the alliances are making explicit the "U.S. is obligated to approve American the Airlines/British Airways application" argument in their private discussions with the DOT and others.

http://lawprofessors.typepad.com/aviation/2009/08/horan-responds-on-the-law-of-antitrust-immunity.html

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