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Virgin Atlantic submits its response on DOJ comments to DOT

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11-Jan-2010 Virgin Atlantic renews call on U.S. Dept. of Transportation to reject British Airways/ American Airlines proposals following concerns from two competition authorities.

Virgin Atlantic Airways has submitted its written response to the U.S. Department of Transportation in relation to the Department of Justice's comments in December on the proposed British Airways/ American Airlines tie-up. The DOJ expressed a number of grave concerns over the competitive and consumer harms of the proposed BA/AA alliance. This is not the first time a competition authority has set out concerns regarding the proposals. In October of 2009, the European Commission issued its Statement of Objections and stated that the proposed alliance "may be in breach of European rules on restrictive business practices."

The Department of Justice said in its submission that the "Applicants' proposed alliance would significantly harm competition on the most significant transatlantic routes" and that "the likely magnitude and value of any of these alleged benefits is overstated."

Virgin Atlantic's response to the DOT states "Virgin Atlantic agrees with the concerns the DOJ has raised about the competitive and consumer harms the proposed link up would cause if the Department was to grant ATI ... Virgin Atlantic urges the Department to deny the application outright."

Sir Richard Branson, President of Virgin Atlantic, said; "Now two competition authorities have voiced their concerns over the proposed BA/AA alliance, we renew our call on the regulators to reject these anti-competitive proposals.

"The competition authorities have thoroughly scrutinized the proposals in an effort to safeguard competition in the interests of consumers. Having done so, both the authorities on opposite sides of the Atlantic have cited concerns. These concerns are absolutely justified and the alliance should not be given the go-ahead."

The U.S. Department of Justice concerns included that the proposed alliance would result in competitive harm on certain transatlantic routes serving 2.5m passengers every year and that competitive entry at Heathrow is unlikely to prevent adverse competitive effects. The DOJ recommends that, "given the risk of significant harm, any grant of immunity should be limited to protect competition."