The latest Bloomberg Businessweek discusses the federal government’s qualms about the US Airways/American Airlines merger. Regardless of the merits of the concerns, what’s disturbing about the article is the degree to which this airline merger seems to have attracted extra attention because of different personnel in positions of power, rather than the airlines’ failure to adhere to clearly defined criteria.
The Justice Department has been notably hands-off with airline mergers. In 2008, Delta Air Lines acquired Northwest, followed by the merger of United Airlines and Continental two years later. Southwest Airlines also bought AirTran. All those deals were approved with relatively few concessions or other regulatory hurdles.
So what’s the problem now?
“If you’re the first merger in an industry that’s consolidating, you’ve got an advantage,” said Robert Doyle, an antitrust attorney in Washington. “If you’re the third or fourth mover, then you can have a problem.”
That appears to be what’s snagging the American-US Airways merger, which was scheduled to close in the third quarter and mark American’s emergence from bankruptcy. …
… “The Department of Justice is saying ‘Enough’s enough,’ the industry is consolidated,” Doyle said in a telephone call with his partner, Andre Barlow.
“They’re not viewing it with the same perspective as they did these prior mergers,” Barlow said. “They’re looking at a national market where pricing could be increased.”
The other difference, Doyle said, is William Baer, a former antitrust attorney in Washington who took over the antitrust unit in January. “He’s very aggressive,” Doyle said, noting the agency’s opposition to Grupo Modelo’s $20 billion acquisition by brewer Anheuser-Busch InBev, which was completed in June after major concessions.
