Justice Department approved every major merger up until now in recent history.

Southwest Acquisition, Deltas acquisition, Uniteds Acquisition

DOJ reuse to accept American ! US Airways merging " iled a complaint against
creation o worlds #iggest airline.
http$%%www.justice.gov%opa%pr%&'()%August%()*at*+'+.html
http$%%cran,ylier.com%&'()%'-%(.%#rea,ing*down*the*dojs*wea,*o#jections*to*
the*americanus*airways*merger%

Ater considering the consumer #eneits rom the new service

/ut prior to this " every other mergers has #een met with approval with the DOJ citing
#eneits such as cost savings and cost savings, supply chain eiciency 0 not li,ely to
lessen competition.
Slide (1 " data presented #y industry to show southwest as a via#le competitor " not in
terms o mar,et share #ut only total num#er o passenger lown. 2Southwest way out o
#ig ) i compare #y revenue " just a#out hal the si3e o Un*4ontinental%Delta and A56*
US7
4layton Act " 8lessen competition9 assessed on the #asis on relevant product mar,et !
relevant geographical mar,et
: see,ing merger approval " would try to deine mar,et as #roadly as possi#le to ma,e it
seem as though there was competition.
:e using passenger mar,et; <assenger and cargo; Or total transportation mar,et " car,
#us, train;
5ost courts let out other modes o transportation 2not considered via#le competitors7
=tc$ Driving rom >? to Detroit @ .hrs, train @+hrs, Alying @ (h.
Bypically concerned greater with passenger rather than reight 2passengers more
vulnera#le compared to #ig reight companies7
Airlines see, to deine geographical mar,ets #roadly 2whole world7
4ourts however tend to measure more narrowly, #ut rather than airport to airport% using
region to region more accurate since could #e more than ( airport within a region 2etc >?
has ) airports7
=tc$ Cashington D4 Airport has limited num#er o slots availa#le " i #oth airlines
com#ine, will control &%) o the availa#le slots.
5onopoly " less competition * 4oncentration levels too high
DOJ says Cashington is a unique products 2vs other & airports near#y " Dallas 2D.mins7
and /altimore 2(hr7 away7
One way o allowing merger is to as, the airline to give up slots 2eg when United acquire
4ontinental " sold slots to Southwest to ma,e it less monopolistic7
Aurthermore given history, consumers have suered due to higher prices and less
competition.
Upon merger u consolidate your hu#s " get rid o airports that are wea,er
4incinnati 2Detroit7
Bhen consolidate aircrats " two smaller planes into ( larger one 2reduce cost and
capacity " once capacity drops price goes up7
Eess choice or consumers and higher prices
Since #oth airlines are ma,ing money and economically via#le " that ta,es away one
incentive to allow approval. 2since neither loo,s li,e a ailing company that will go out o
#usiness i acquisition not approved7
Usually anti*trust laws waived i company dying " cos i company dies you will lose
competition anyway on top o jo#s and employmentF
Eoo, at slide (& " why do the rest not compete on ( stop ares; Bacit agreement%collusion
" dont compete on (stop and connecting services.
/ut US airways still competes #ecause its hu#s less valua#le so it is a good game to play
" once merger this choice and competition will #e lost.
Ancillary ees " re#oo,ing ees, ood etc *G #ut now all airlines starting to standardi3e
ancillary ees " one raise all raise to meet it
Derive revenue rom these ees which harm consumers " higher cost o transportation *
4ompetition on these charges.
H 4ontrast this to previously regulators approving mergers o airlines #ut now rejecting
either (7 stupid and didnt oresee the past events leading to current situation today or &7
changing the rules o the game
: you were a lawyer or American ! US Airways " how to argue
(7 loo, at uture " i & #ig dogs squee3e two smaller guys out " even less competition
&7 loo, at past history " two giants have relied on this
)7 compromise on slots
D7 pro#lems in mar,et cannot #e solved #y denying merger " simply spot targeting rather
than solving an industry wide pro#lem
http$%%cran,ylier.com%&'()%'-%(.%#rea,ing*down*the*dojs*wea,*o#jections*to*the*
americanus*airways*merger%
tacit collusion o hu#s " has always #een a live and let live philosophy.
Bhe (stop ares are same price as direct " so who would ly (stop now;; Caste time and
cannot save moneyF " #asically saying no more competition or that particular areF
DOJ saying consumers pay more than they should 2#ut currently US airways still
competing the (stop #asis " unless merger goes through7
a7 American could ma,e the argument that DOJ only tal,ing a#out domestic mar,etF
Ce need a major US presence in the international mar,et " currently just part o it not a
#ig deal.
4ompetition rom a#road #ecoming more aggressive " i you want US carriers to
participate, they must #e strong and si3ea#le and have a #ig domestic leet
#7 American airlines can argue that recently got out o #an,ruptcy " should merge to
ensure dont go down that same route. 2&'(& #an,ruptcy " &D.I#illion asset value 7
Diiculty is that they initially opposed and argued inancially via#le without acquisitionF
Airline Bankruptcy
http$%%www.mcgill.ca%iles%iasl%aspl1()JpaulJdempseyJAirline/an,ruptcies&'(&.pd
going concern value " ie cashlow an airline can generate is more than liquidation "
#etter to go under reorg " esp or larger airlines with more resources
E/O " Aran, Eoren3o %
holding companies
Cent to <eople =Kpress started Lu# at >ewar,
2co determines it at the end7 Deined /eneit <ension <lans vs Deined 4ontri#ution
<ension <lans
penalty or ta,ing it out #eore .+ and a hal.
Mery low taK rate when you ta,e it out 2none until u withdraw7
Civil Liability for Polish Air Crash in Smolensk
4hicago 4onvention AnneK () applies to civil lights under international law
Bhis was a state light carrying the <resident 2qn " ind another way to apply law "
6ussian or <olish #oth ind no avour7
Carsaw%5ontreal *
6ome%5ontreal " )< lia#ilities;