UPDATE: US To Miss Deadline On Airline Antitrust Ruling
27 Octubre 2009 - 8:05AM
Noticias Dow Jones
Differences between the U.S. Department of Transportation and
Department of Justice are contributing to delays in the
Transportation Department's ruling on a proposed alliance between
AMR Corp.'s (AMR) American Airlines, British Airways PLC (BAY.LN)
and Spain's Iberia Lineas Aereas de Espana SA (IBLA.MC), according
to people familiar with the case.
The Department of Transportation, or DOT, will not issue a
preliminary ruling on the three carriers' application for antitrust
immunity by its original Oct. 31 deadline, these people said. The
delay will be at least two weeks and could push a final ruling into
early next year, these people added.
AMR Chief Executive Gerard Arpey said last week that the DOT may
not decide by its Oct. 31 deadline, but he gave no details and said
he was optimistic that regulators will approve the airlines'
request.
American, BA and Iberia have applied to antitrust authorities in
the U.S. and the European Union for permission to cooperate on
marketing and strategic planning in ways normally deemed illegal
collusion. The trio, which cooperate in the oneworld
airline-marketing alliance, argue they should be granted antitrust
immunity because their rivals in the Star Alliance and the SkyTeam
alliance have already received similar status from the U.S.
"We remain hopeful that we will get a decision by the statutory
deadline but, having said that, the decision in the Star Alliance
case was issued after the deadline had passed," said a spokeswoman
for British Airways.
"Obviously we don't control the timing but, regardless of that,
we believe we have made a strong case and remain confident that our
application will be approved," she added.
E.U. officials in Brussels are reviewing all three alliances. On
Sept. 30 they sent the three oneworld airlines a 400-page document
spelling out a number of concerns with antitrust issues in their
proposed link-up. The three are now preparing a response to the
report, known as a statement of objections, and are scheduled to
begin negotiations with E.U. competition officials in coming weeks.
The trio hope to assuage E.U. antitrust concerns by offering to
make frequent reports on their market share and other competitive
data, according to a person familiar with the discussions.
U.S. officials want to coordinate their response with the E.U.'s
findings, which has added to the DOT's delay, several people close
to the case said.
In Washington, a debate among regulators over how to assess the
proposed alliance and what regulatory price should be demanded of
the airlines is slowing the review, said the people familiar with
the situation. In recent years, the DOT, which regulates airlines,
has been more tolerant of alliances than the Justice Department,
which generally views them as harmful to consumers.
When Continental Airlines Inc. (CAL) earlier this year applied
for antitrust immunity with several members of the Star Alliance,
the Justice Department objected, but was overruled by the DOT,
which approved the waiver. Similar differences are now delaying the
application by oneworld members.
The bid by American, BA and Iberia has become highly political
in the U.S., with a parallel debate between congressional
committees handling transportation and justice.
The application is the third time over the past decade American
and BA have requested an antitrust waiver for closer cooperation.
The past two times they were told they would need to relinquish a
significant number of take-off and landing slots at London's
Heathrow Airport to foster new competition. Both times, the pair
said the proposals were onerous and abandoned their
applications.
Industry officials widely expect competition authorities on both
sides of the Atlantic again to exact a regulatory price in Heathrow
slots, although perhaps fewer than in the past because the airport
is now more competitive. The exact number is likely to be a key
point of negotiations in coming weeks.
BA Chief Executive Willie has said repeatedly that the airlines
should not be required to surrender any slots at Heathrow because
of changes in the competitive landscape in recent years. BA will
instead offer to provide antitrust authorities with reports of
market data and commitments to limit harmful market dominance,
according to one person familiar with the discussions.
By Daniel Michaels, The Wall Street Journal; 0032-2-741-1325;
daniel.michaels@wsj.com; and Kaveri Niththyananthan, Dow Jones
Newswires; 4420 7842 9299; kaveri.niththyananthan@dowjones.com
(Peppi Kiviniemi in Brussels contributed to this article.)