Antitrust laws

The US government has antitrust acts in place to ensure that there is fair competition between businesses. This is a practice that benefits consumers. For example, if an apple grower had 100% of the market share of apples in the US, then that would be a problem because consumers would have no choices and would probably have to pay higher prices because there would be no other apple growers to compete with.

Bankruptcy and then merger

This example helps illustrate the case of US Airways and AMR. AMR owns American Airlines, which has just emerged from bankruptcy, contingent upon it settling its antitrust case. US Airways is buying AMR, which has just restructured under a lengthy Chapter 11 bankruptcy. The problem with this take over is that it would reduce competition and choice for airline passengers. There would be a small number of major carriers in the US that would control most of the air travel market share. For this reason, the Department of Justice wanted to block the merger of US Airways and AMR according to the November 13, 2013 issue of the Financial Times.

Satisfying the Department of Justice

To solve this predicament, the US Attorney General, Eric Holder, noted that merged carrier would have to give up a number of take-off and landing rights at a few major airports as well as decrease the number of gates that it can use at its major hubs. The group agreed and gave “up 52 take-off and landing slots at Washington’s Reagan National Airport and 17 slots at New York’s LaGuardia.” Attorney General Holder has said that this will allow low cost carriers to offer service to consumers and increase competition among airlines to help keep ticket prices down. Bankruptcy can be a process, but it looks like the Department of Justice will be willing to allow the two airlines to merge and for American Airlines to have its fresh start.

About us

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