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How Proposed Mergers and Acquisitions Are Reviewed
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American —————————————————— AMERICAN Air Cal —————————————————————— 1 TWA (London routes) ———————————————— Eastern (Latin American routes)———————————– United ———————————————————- UNITED Pan Am (Transpacific, Latin American, & ————- 1 London Routes) Air Wisconsin Delta________________________ DELTA Western Pan Am______________________ (European routes and N. Y. shuttle) Northwest ____________________ North Central _________ Republic Southern________________ і Hughes Airwest Texas International_____________ Continental___________________ New York Air __________________ Frontier______________ People Express_______ Britt___________________ і PBA__________________________ Braniff (Latin America) __ Eastern _______________ Rocky Mountain_______________________________ USAIR ______________________________ US AIRWAYS PSA_________________________________ I Empire_________________ Piedmont________ Henson__________________ I Midway __________________________________ (Philadelphia gates and Canadian routes) TWA________________________________ TWA** Ozark_________________________________ I Pan Am_____________________________ PAN AM National________________________________ | Ransome________________________________ ‘Renamed Continental Airline Holdings "Merged with American 2001 FIGURE 32-1 Historical major air carrier mergers, acquisitions, purchases, and consolidations through 2001. Please refer to Chapter 35 for an update of mergers and acquisitions. |
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TEXAS AIR* |
Carriers proposing to merge are required to provide notice to the DOJ and to the Federal Trade Commission (FTC). The DOJ reviews the
proposed merger plan, usually within a period of 30 days, and if no competitive issues are discerned by the DOJ, the parties are free to proceed. In some cases, the DOJ may issue its request for additional information, which prevents further action toward merger by the carriers for another 20 days. Often, concerns of the DOJ are addressed in this manner and any issues are resolved without formal action. Other times, litigation is required to resolve the issues.
The DOJ normally applies the provisions of Section 7 of the Clayton Antitrust Act, which prohibits the acquisition of stock or assets “where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” The statute provides the means for the proposed action to be prevented or delayed while the objections of the government are heard. The procedure reflects the fact that, once a merger process has begun or has been completed, it is very difficult to undo. Delay or prevention of the proposed merger activity is accomplished by the filing of a complaint in federal court and the seeking of a temporary restraining order or injunction to prohibit the airlines from proceeding with the proposed action.
The authority of the DOJ extends to instances involving the acquisition of relatively minor assets of one carrier by another, as in the case of gates or slots at airports. In 1989, for example, the DOJ moved to block Eastern’s proposal to sell gates to US Air at Philadelphia International Airport, and again in 1991 when Eastern sought to sell slots and gates to United at Reagan Washington National Airport.
Finally, the DOJ has authority, jointly with the DOT, over airline acquisition of international route authority and mergers between domestic and foreign carriers. The DOT, in turn, works with the Department of State, which has final authority in dealing with foreign governments. The DOJ may challenge these proposals in the same manner as in domestic acquisitions.