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DOJ defends American Airlines-US Airways merger settlement

DOJ defends American Airlines-US Airways merger settlement

The government called the agreement a “major victory for American consumers”

The Department of Justice (DOJ) agreed to a settlement that allowed the American Airlines-US Airways merger to proceed as planned in November 2013, but still, four months later, the department is defending the deal to courts and consumers.

In a submission to U.S. District Judge Colleen Kollar-Kotelly, the government called the agreement a “major victory for American consumers.” Particularly, the government pointed to the low-cost carriers who received takeoff and landing slots at major airports, which the submission deemed beneficial to the American public.

It will be up to Kollar-Kotelly to determine whether the deal is indeed in the American public’s best interest. In doing so, the judge received comments about the settlement from 14 different interested parties before making her decision, including the DOJ’s 51-page report.

Among the other comments were consumer advocates who felt the settlement didn’t go far enough and lawmakers who felt the agreement would hurt small communities. One particularly noteworthy comment came from Delta Air Lines Inc., which claimed that the DOJ’s lawsuit was faulty in the first place because the department did not truly understand the industry. Delta also claimed that the DOJ was mistaken in directing the merged company to sell assets to low-cost carriers.

The DOJ originally filed an antitrust suit against the American Airlines-US Airways merger in August 2013, claiming the combined company would reduce competition and result in higher fares for travelers. “By challenging this merger, the Department of Justice is saying that the American people deserve better,” said U.S. Attorney General Eric Holder in a statement at the time. “This transaction would result in consumers paying the price—in higher airfares, higher fees and fewer choices.”

However, in November, the DOJ and the merged airline came to a deal. Through the terms of the deal, the company would agree to divest facilities at major airports around the company to keep those airports competitive. That total included 104 takeoff and landing slots at Washington D.C.’s Ronald Reagan National Airport, where the company would hold a near monopoly.

According to The Wall Street Journal, the company has received $425 million in total divestitures by selling off slots in New York City and Washington D.C., as well as through a subleasing deal with the airline JetBlue.

 

InsideCounsel has been on this story from the beginning. For the full timeline, check out these articles:

DOJ clears American Airlines-US Airways merger for takeoff

DOJ, US Airways and AMR Corp. in settlement discussions over airline merger

DOJ asks judges to delay civil cases over budget issues

US Airways defends American Airlines merger

Michigan the latest to join American Airlines-U.S. Airways antitrust suit

American Airlines and US Airways seek early trial in antitrust suit

DOJ files antitrust suit against U.S. Airways-American Airlines merger

Attorneys general join DOJ probe into US Airways-American Airlines merger

American Airlines-US Airways merger approved

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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