11-Sep-2013 1:59 PM

AMR Corporation files answer to DoJ's amended antitrust complaint

AMR Corporation filed (10-Sep-2013) its answer to the US Department of Justice's (DoJ) amended antitrust complaint against the company's proposed merger with US Airways. The company stated: "The proposed merger of American and US Airways will increase competition in every meaningful respect. Plaintiffs’ complaint tries to explain why this is not correct, but can only do so by ignoring the realities of the airline industry in the 21st Century. This transaction, viewed through the lens of the actual US airline industry today, rather than some idealised vision of the past, does not violate the antitrust laws." The carrier also dismissed the DoJ's use of the Herfindahl-Hirschman Index to identify 1014 "presumptively illegal" routes, stating: "And while the Complaint now relies largely on mechanical recitations of Herfindahl-Hirschman Index numbers for individual city-pairs, it ignores that other recent airline mergers resulted in comparable HHI values and were nonetheless approved and lauded by the DoJ because across the entire network the net benefits stemming from the transactions were overwhelmingly positive. The DoJ’s approach in evaluating those earlier mergers – unlike in this transaction – was fully consistent with its own Merger Guidelines, which recognise that market shares and HHI numbers are merely starting points for analysis, not the decisive results portrayed in this Complaint." AMR Corporation added on the list of routes:

  • "On almost half of the routes, either AA or US flies less than 10% of the passengers on the route";
  • "Almost 90% of the passengers on these routes will continue to be served by at least 3 airlines after the merger";
  • "About 85% of passengers on these routes will continue to be served by one of the LCCs. Since LCCs fly 40% of domestic airline passengers in the US, the notion that LCC competition and potential entry are not the dominant competitive fact in the industry is out of touch with market realities";
  • "Virtually none of the routes have any barriers to new entry." [more - original PR]

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