UPDATE: US Justice Dept Files Objections To Oneworld Application
December 21 2009 - 4:29PM
Dow Jones News
The U.S. Justice Department said AMR Corp.'s (AMR) American
Airlines unit and British Airways PLC (BAIRY, BAY.LN) need to make
concessions to secure its approval for a planned extension of their
Oneworld alliance.
The DOJ said granting U.S. antitrust approval to alliance
members could result in "competitive harm" on six transatlantic
routes if allowed in its proposed form.
The recommendation sets up a potential confrontation with the
U.S. Department of Transportation, which has final say on
airline-competition policy and which has already overruled the
Justice Department on a similar application from rival carriers
earlier this year.
The Transportation Department was due to make its preliminary
judgment by the end of October, but delayed this while talks
continued with the Justice Department.
U.S. competition officials in the Obama administration are
taking a harder line in some sectors than during the previous
administration. The Justice Department's decision to issue separate
comments on Oneworld suggests it couldn't reach agreement with
Transportation Department officials.
The Justice Department dismissed many of the detailed arguments
made by BA, American and three other Oneworld members--Iberia
Lineas Aereas de Espana SA, Finnair and Royal Jordanian Airlines.
The airlines and the Transportation Department weren't immediately
available for comment.
The Justice Department proposed the airlines give up slots at
congested airports or make concessions on six routes--including
five from London's congested Heathrow Airport--it viewed as
"concentrated."
British Airways and American have twice tried and failed to
secure immunity to coordinate fares, schedules and marketing.
Previous efforts were dropped because regulators' concessions were
seen as too onerous.
The Justice Department didn't specify how many slots might need
to be surrendered to secure its backing, though it suggested that
route "carve outs" and other concessions may be a better potential
remedy.
The Oneworld members are seeking parity with immunity already
granted to the rival Star and SkyTeam groupings. The Oneworld
members argued that the U.S.-E.U. open-skies deal had leveled the
playing field, and members have said they saw no need for slot or
route concessions.
European regulators have already voiced their concerns about the
Oneworld proposal.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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