20-Jun-2013 1:47 PM

Department of Justice finds US/AA merger would reduce competition

USDepartment of Justice (DOJ) and the US Government Accountability Office (GAO) released (19-Jun-2013) a review of the proposed merger between American Airlines and US Airways and the affect this may have on competition within the industry. DOJ used an integrated analytical framework as described in the Horizontal Merger Guidelines which found the proposed merger would likely have an anticompetitive effect in relevant markets. The report read, “GAO has previously reported that mergers can result in increased revenues by offering improved network connections and schedules, but also through higher fares on some routes. Cost savings can be generated by eliminating redundancies and operational efficiencies, including reducing service, but can be muted by problems in combining different aircraft, technologies, and labour forces. In the case of US Airways and American, they estimate that a merger would yield $1.4 billion in annual benefits from increased revenues and reduced costs.” [more - original PR]

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