DOJ Seeks Crackdown On New Star Airline Pact
29 Junio 2009 - 1:04AM
Noticias Dow Jones
The U.S. Department of Justice has voiced strong opposition to
the granting of broad antitrust immunity to Continental Airlines
Inc. (CAL) and nine members of the Star Alliance group of
carriers.
The department rejected the airlines' pursuit of global immunity
from antitrust laws in favor of backing more limited cooperation on
transatlantic routes, and also expressed concern about the domestic
"spillover" of closer ties between Continental and United Airlines,
a unit of UAL Corp. (UAUA).
The move, revealed in a filing with the U.S. Department of
Transportation department late Friday, could have wide-ranging
implications for competition policy in the global airline industry,
and reflects the tougher stance on antitrust enforcement pledged by
the Obama administration.
DOT had already granted tentative approval to much of the
application from Star members, but the toughly-worded rejoinder
from the justice department reflects what some observers view as
tensions between the agencies.
Aside from Star members, the 58-page submission could also force
a rethink of a separate application for immunity by members of the
rival Oneworld alliance, led by the British Airways PLC (BAY.LN)
and American Airlines, a unit of AMR Corp. (AMR).
DOJ said it was unconvinced that many of the claimed benefits
from immunized alliances could not be achieved through more
traditional cooperation.
It could also spill into the already slow progress in launching
talks between the U.S. and the European Union on a second stage of
their open-skies liberalization pact, due to start later this
year.
Competition policy is expected to be a key part of the agenda.
Continental is due to leave SkyTeam on Oct. 24, joining Star soon
after, and had hoped to secure antitrust approval by late May.
DOJ said Star members' claims that they would not expand their
alliance without immunity was "not credible". Oneworld members had
hoped to secure immunity by year end.
The DOJ submission railed against much of the analysis and
conclusions of the DOT's decision in April, and said the Star
airlines and Continental had failed to demonstrate that antitrust
immunity was necessary to produce the promised level of consumer
benefits.
More damagingly, DOJ said granting expanded immunity to the
alliance - which already enjoys some limited breathing room from
competition laws - was "likely to result in harm" on many
international routes, mainly in the form of higher fares.
It also cast a wary eye on planned deeper cooperation between
United and Continental, which it warned may "pose harm" to
competition on domestic routes. DOT had already toughened its
oversight of the proposed tie-up between the third and
fourth-largest U.S. carriers, which had pledged to keep domestic
cooperation separate from their international alliance, but DOJ
seemed unimpressed.
"Because the Applicants include two large, domestic competitors,
a sweeping grant of immunity raises significant concerns about harm
to domestic competition, a risk that cannot be completely mitigated
through confidentiality guidelines," said DOJ in its submission,
admitted after the official DOT deadline for responses.
DOJ pointed in particular to potential anti-competitive issues
from cooperation between Continental and United on routes to Asia
and Latin America, while expanded Star operations on a number of
transatlantic routes and U.S.-Canada markets also raised concerns
and objections.
SkyTeam, led by Delta Air Lines Inc. (DAL) and Air France-KLM
and the third of the major alliance groupings that dominate the
global airline industry alongside Star and Oneworld, already has
comprehensive antitrust immunity on transatlantic routes.
Star and Oneworld had used securing parity with SkyTeam as part
of their argument for immunity, but DOJ noted that antitrust
approval had in the past been granted to help secure open-skies
deals.
With open skies already in place with many nations and the
European Union - or deemed as out of reach in the case of China and
Brazil - DOT suggested antitrust approval was no longer a suitable
means to achieve broader market liberalization.
The DOJ's toughening policy comes amid an ongoing probe by the
European Commission into the consumer impact of granting immunity
to existing and proposed alliances. Continental and Star members
were not immediately available for comment.
-By Doug Cameron, Dow Jones Newswires; (312) 750 4135;
doug.cameron@dowjones.com