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Editor: Brian JM Quinn
Boston College Law School

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Thursday, July 2, 2009

DOJ Wakes Up to Antitrust

In a previous post, Mike noted that US antitrust authorities have a adopted a more aggressive enforcement stance following the change of administrations.  There's another example of the more vigorous enforcement attitude this morning.  According to the WSJ, the DOJ has filed comments with the Department of Transportation objecting to a grant of blanket antitrust immunity with respect to United and Continental's plan to share pricing and scheduling information as part of the "Star Alliance." (Continental is leaving "SkyTeam" to join "Star Alliance."   The 58 page comment letter outlining the DOJ's objections is summarized below:  

Antitrust enforcement has played a vital role in bringing increased competition and consumer benefits to the deregulated airline industry. Accordingly, any exemptions from the antitrust laws should be strongly disfavored. To overcome the presumption against antitrust immunity, applicants must demonstrate that their collaboration will generate significant public benefits that outweigh any harm to competition, that they cannot achieve those benefits without immunity, and that they have narrowly tailored the requested immunity to achieve the benefits claimed.

For many past applications, the principal public interest benefit furthered by DOT's grant of immunity has been the negotiation of open skies agreements with the home country of the U.S. carriers' alliance partners. In the present matter, open skies agreements have been signed with the home countries of all the foreign applicants, and those foreign carriers will continue to be members of the immunized alliances whatever DOT decides here. Granting immunity for  Continental to coordinate with Star ATI Alliance' members on U.S. to Latin American or Pacific routes is not likely to result in further liberalization discussions between the U.S. and countries with which we have not yet negotiated open skies, such as China or Brazil. Therefore, an expansion of immunity offers no open skies benefits for U.S. consumers.

Where an application does not directly promote open skies with its attendant consumer benefits, applicants bear a heavy burden to prove benefits specific to their alliance agreements that justify immunity. Where an application involves the presence of two major domestic competitors, the request for immunity warrants particularly close scrutiny.

The DOJ's stance on the United/Continental joint venture suggests that deal planners might have to be more wary of crossing paths with antitrust authorities in this new enforcement environment.

-bjmq

http://lawprofessors.typepad.com/mergers/2009/07/doj-wakes-up-to-antitrust.html

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