Showing posts with label COMPETITION. Show all posts
Showing posts with label COMPETITION. Show all posts

Friday, July 3, 2015

DOJ FILES LAWSUIT TO STOP GE FROM SELLING APPLIANCE BUSINESS TO ELECTROLUX

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, July 1, 2015
Justice Department Files Antitrust Lawsuit to Stop Electrolux from Buying General Electric's Appliance Business

The Department of Justice filed a civil antitrust lawsuit today seeking to block the acquisition of General Electric Company’s appliance business by AB Electrolux and Electrolux North America Inc., whose brands include Frigidaire.  The department said that the $3.3 billion acquisition would combine two of the leading manufacturers of ranges, cooktops and wall ovens sold in the United States, eliminating competition that has benefited American consumers through lower prices and more options.  According to the department’s complaint, purchasers in the United States spent over $4 billion on these major cooking appliances in 2014.

“Electrolux’s proposed acquisition of General Electric’s appliance business would leave millions of Americans vulnerable to price increases for ranges, cooktops and wall ovens, products that serve an important role in family life and represent large purchases for many households,” said Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division.  “This lawsuit also seeks to prevent a duopoly in the sale of these major cooking appliances to builders and other commercial purchasers, who often pass on price increases to home buyers or renters.”  

The Antitrust Division’s lawsuit, which seeks to prevent the companies from merging and to preserve their existing head-to-head competition, was filed in the U.S. District Court for the District of Columbia.

Electrolux North America Inc. is an Ohio corporation headquartered in Charlotte, North Carolina.  Electrolux North America Inc. makes and sells major appliances, including those under the brand names Frigidaire, Tappan and Electrolux.  Electrolux’s annual major-appliance sales in the United States total approximately $2.6 billion.  Electrolux North America Inc. is a wholly owned subsidiary of defendant AB Electrolux.

General Electric Company is a New York corporation headquartered in Fairfield, Connecticut.  General Electric’s appliance business is based in Louisville, Kentucky.  It makes and sells major appliances, including those under the brand names GE Monogram, GE CafĂ©, GE Profile, GE, GE Artistry and Hotpoint.  In the United States, General Electric’s annual major appliance sales total approximately $3.4 billion.

Saturday, February 14, 2015

AMBASSADOR SEPULVEDA ON TRADE PROMOTION AND OPEN INTERNET FIGHT

FROM:  U.S. STATE DEPARTMENT
Trade Promotion and the Fight to Preserve the Open Internet
Remarks
Ambassador Daniel A. Sepulveda
Deputy Assistant Secretary and U.S. Coordinator for International Communications and Information Policy, Bureau of Economic and Business Affairs
U.S. Chamber of Commerce and Association of American Chambers of Commerce in Latin America
Los Angeles, CA

February 11, 2015

Three billion people are connected to the Internet today. And trillions of devices are set to join them in the Internet of Things. Together, the connectivity of people and machines is enabling economic and social development around the world on a revolutionary scale.

But it will take open markets, the cooperation of leaders around the world, the participation of a vibrant and diverse range of stakeholders, and strong trade agreements, with language preserving the free flow of information, to protect the Internet’s potential as the world’s engine for future growth, both at home and abroad.

As the number of Internet users worldwide has ballooned from 2 to 3 billion, the increase in Internet use creates significant economic potential. The Obama Administration is working to unlock the promise of e-commerce, keep the Internet free and open, promote competitive access for telecommunications suppliers, and set digital trade rules-of-the-road by negotiating new trade agreements. Trade Promotion Authority legislation and the pending trade agreements we expect Congress to consider over the coming months and years will provide that kind of protection. These agreements aim to ensure that the free flow of information and data are the default setting for nations. This will preserve the architecture that has empowered the Internet and global communications to fuel economic growth at home and abroad. It is in our interest, across parties and ideology, to ensure we move forward and approve TPA and the pending agreements for many reasons, but promoting the preservation and growth of global communications and the open Internet is one of the strongest.

Senator Ron Wyden, the ranking member on the Senate Finance Committee, has made the argument well, stating, "America’s trade negotiating objectives must reflect the fact that the Internet represents the shipping lane for 21st Century goods and services… Trade in digital goods and services is growing and driving economic growth and job creation all around the country. U.S digital exports are beating imports by large margins, but outdated trade rules threaten this growth by providing opportunities for protectionist policies overseas. The U.S. has the opportunity to establish new trade rules that preserve the Internet as a platform to share ideas and for expanding commerce..."

Senator Wyden is absolutely correct. Our pending agreements with nations in the Pacific community will establish rules for the preservation of those virtual shipping lanes as enablers of the transport of services and ideas, allowing startups and the voices of everyday people to challenge incumbent power in markets and ideas.

If we are successful, the partnership of nations across the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership regions coming behind agreements to preserve the free flow of information will serve as a powerful counterweight to authoritarian governments around the globe that have demonstrated a clear willingness to interfere with open markets and an open Internet. And make no mistake about it, if we do not seize every opportunity at our disposal to win commitments to an open, global Internet, we risk letting others set the rules of the road.

Authoritarian regimes view the Internet’s openness as a threatening and destabilizing influence. The Russian government, just last month, pressured social media companies to block access to pages used to organize peaceful political protests. In China, authorities have blocked Gmail and Google’s search engine. In addition to ongoing and systematic efforts to control content and punish Chinese citizens who run afoul of political sensitivities, such measures are an effort to further diminish the Chinese people’s access to information, while effectively favoring Chinese Internet companies by blocking other providers from accessing its market. And we know they are urging others to take similar action. These trade barriers harm commerce and slow economic growth, and they produce socially oppressive policies that inhibit freedom.

The rules of the road for commerce, and Internet-enabled trade and e-commerce, are up for grabs in Asia. We’re working harder than ever to bring home trade agreements that will unlock opportunities by eliminating barriers to U.S. exports, trade, and investment while raising labor, environment, and other important standards across the board. Right now, China and others are negotiating their own trade agreements and seeking to influence the rules of commerce in the region and beyond. These trade agreements fail to meet the high standards that we strive for in our free trade agreements, including protection for workers’ rights and the environment. And they don’t protect intellectual property rights or maintain a free and open Internet. This will put our workers and our businesses at a disadvantage.

We know that both old and new American businesses, small and large alike, are dependent on the global Internet as the enabler of access to previously unreachable consumers. In the U.S. alone, American Internet companies and their global community of users contribute over $141 billion in annual revenue to the overall U.S. GDP, simultaneously employing 6.6 million people. And the Internet is not simply about the World Wide Web, it is the communications platform for managing global supply chains, distributing services, and acquiring the market information necessary to succeed anywhere.

Many countries no longer primarily produce products. Rather, businesses produce product components and provide services, many of which are delivered digitally. In order to remain competitive globally and promote the capacity of businesses to innovate, the United States and our partners in the Western Hemisphere must build the Americas into a shared, digitally connected, integrated platform for global success. By working with our trade partners in Latin America and Asia to conclude the Trans-Pacific Partnership we are advancing this vision and making it a reality. We will set the standards with twenty-first century trade agreements.

We know that not everyone is convinced of the merits of open markets. And to win their hearts and minds, we have to demonstrate and communicate how these two values – open markets and the open Internet - are interconnected. And we have to show that Trade Promotion Authority and our agreements embrace the values that underpin the Internet today.

As Ambassador Froman has said, “Trade, done right, is part of the solution, not part of the problem.” And, because it is true, our progressive friends should recognize that the fight for open markets is the position most consistent with our progressive tradition and values.

It was Woodrow Wilson who said, “The program of the world's peace, therefore, is our program; and that program, the only possible program, as we see it, is this” and he listed his fourteen points. Among them was number three: “The removal, so far as possible, of all economic barriers and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.”

It was Franklin Roosevelt who asked the New Deal Congress for the first grant of trade negotiating authority.

In his remarks at the signing of the Trade Expansion Act of 1962, it was JFK who said, “Increased economic activity resulting from increased trade will provide more job opportunities for our workers. Our industry, our agriculture, our mining will benefit from increased export opportunities as other nations agree to lower their tariffs. Increased exports and imports will benefit our ports, steamship lines, and airlines as they handle an increased amount of trade. Lowering of our tariffs will provide an increased flow of goods for our American consumers. Our industries will be stimulated by increased export opportunities and by freer competition with the industries of other nations for an even greater effort to develop an efficient, economic, and productive system. The results can bring a dynamic new era of growth.”

And it is consistent with the sentiments of these giants in our tradition, our progressive tradition, that President Obama most recently stated, “Twenty-first century businesses, including small businesses, need to sell more American products overseas. Today, our businesses export more than ever, and exporters tend to pay their workers higher wages. But as we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and our businesses at a disadvantage. Why would we let that happen? We should write those rules. We should level the playing field. That’s why I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but are also fair. It’s the right thing to do.”

Friends, we have both a political and economic interest in promoting open markets and an open Internet. Preservation of these ideals is and should remain a bipartisan, and broadly held goal. It is critical to our future and contained within the language we are asking Congress to approve.

Monday, November 10, 2014

LEADERS MAKE STATEMENT ON TRANS-PACIFIC PARTNERSHIP (TPP)

FROM:  THE WHITE HOUSE 
November 10, 2014
Trans-Pacific Partnership Leaders’ Statement
November 10, 2014

We, the Leaders of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam, welcome the significant progress in recent months, as reported to us by our Ministers, that sets the stage to bring these landmark Trans-Pacific Partnership (TPP) negotiations to conclusion. We are encouraged that Ministers and negotiators have narrowed the remaining gaps on the legal text of the agreement and that they are intensively engaging to complete ambitious and balanced packages to open our markets to one another, in accordance with the instructions we gave them in Bali a year ago. With the end coming into focus, we have instructed our Ministers and negotiators to make concluding this agreement a top priority so that our businesses, workers, farmers, and consumers can start to reap the real and substantial benefits of the TPP agreement as soon as possible.

As we mobilize our teams to conclude the negotiations, we remain committed to ensuring that the final agreement reflects our common vision of an ambitious, comprehensive, high-standard, and balanced agreement that enhances the competitiveness of our economies, promotes innovation and entrepreneurship, spurs economic growth and prosperity, and supports job creation in our countries. We are dedicated to ensuring that the benefits of the agreement serve to promote development that is sustainable, broad based and inclusive, and that the agreement takes into account the diversity of our levels of development.  The gains that TPP will bring to each of our countries can expand even further should the open approach we are developing extend more broadly throughout the region.  We remain committed to a TPP structure that can include other regional partners that are prepared to adopt its high standards.

Our fundamental direction to our Ministers throughout this process has been to negotiate an outcome that will generate the greatest possible benefit for each of our countries.  In order to achieve that, our governments have worked to reflect the input we each have received from our stakeholders in the negotiation.  Continued engagement will be critical as our Ministers work to resolve the remaining issues in the negotiation.

Thursday, September 25, 2014

HHS ANNOUNCES 77 NEW HEALTH INSURERS WILL ENTER MARKETPLACE IN 2015

FROM:  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 
New Report: Health Insurance Marketplace will have 25 percent more issuers in 2015
77 new health insurance issuers means greater choice and competition for consumers

A report released by the Department of Health and Human Services shows that consumers will have more choices as they shop for quality, affordable coverage on the Health Insurance Marketplace in 2015, because there will be a net 25 percent increase in the number of issuers offering Marketplace coverage in 2015.  In total, 77 new issuers will offer Marketplace coverage.

“When consumers have more choices, we all benefit,” said Secretary Sylvia M. Burwell.  “In terms of affordability, access, and quality, today’s news is very encouraging.  It’s a real sign that the Affordable Care Act is working.”

Today’s report examines preliminary data from 36 states run or fully supported by the federal government (Federal Marketplace) plus eight states operating State-based Marketplaces, and finds that a larger set of insurance issuers will offer plans in the Marketplaces in 2015.  Specifically:

In the 44 states for which we have data, 77 issuers will be newly offering coverage in 2015.

The Federal Marketplace states alone will have 57 more issuers in 2015; a 30 percent net increase over this year.

The eight State-based Marketplaces where data is already available will have a total of six more issuers in 2015, a ten percent net increase over this year.
Four of the 36 states in the Federal Marketplace will have at least double the number of issuers they had in 2014.

In total, 36 states of the 44 will have at least one new issuer next year.   And some of the nation’s largest insurance companies will be offering coverage in more than a dozen new states, joining the hundreds of insurance companies already participating in the Marketplace.
The report’s findings are preliminary.

Today’s report demonstrates that the Marketplace is working to increase competition and lower costs for consumers.  Previous estimates have found a correlation between greater competition and lower costs.  Specifically, an increase of one issuer in a rating area is associated with a 4 percent decline in the second-lowest cost silver plan premium, on average.  In 2014, consumers in regions with larger numbers of issuers were able to access a wider range of choices.

Monday, April 7, 2014

FIRST EVER EXTRADITION ON ANTITRUST CHARGE

FROM:  U.S. JUSTICE DEPARTMENT 
Former Marine Hose Executive Extradited from Germany to Face Charges of 
Participating in Worldwide Bid-Rigging Conspiracy

WASHINGTON — Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today. This marks the first successfully litigated extradition on an antitrust charge.

Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013. He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies. As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007. Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

Pisciotti is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs provided assistance.

Tuesday, December 10, 2013

CFTC CHAIRMAN GENSLER'S STATEMENT BEFORE FINANCIAL STABILITY OVERSIGHT COUNCIL

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Statement of Chairman Gary Gensler before the Financial Stability Oversight Council

December 9, 2013

I want to thank Secretary Lew for his kind words.

Five years ago when President-elect Obama asked me to serve, the economy was in a free fall. Americans were paying for the crisis with their jobs, their pensions and their homes.

Our financial system and our financial regulatory system had failed the American public.

Since then, the dedicated staffs of the Financial Stability Oversight Council’s (FSOC) member agencies have been hard at work to ensure finance better serves the economy.

Finance is but one part of our interconnected economy. The vast majority of opportunity, growth and innovation are outside of finance. In fact, 94 percent of private sector jobs are not in finance.

Finance best serves the economy when markets operate under common-sense rules of the road.

President Roosevelt understood this when he, along with Congress, transformed markets. Their reforms – enhancing transparency, access, and competition in the futures and securities markets and overhauling the nation’s banking laws – established the foundation for the U.S. economic growth engine for decades.

Five years ago President Obama and Congress faced similar challenges in the aftermath of this era’s financial crisis – how to modernize finance’s rules of the road so they work best for the public.

Through Dodd-Frank reforms, many of which now have been implemented by FSOC member agencies, much progress has been made.

First, at the heart of reform is ensuring that the largest financial institutions in our free-market system have the freedom to fail. That was true for my dad’s small family business in Baltimore. Nobody would have bailed him out if he didn’t make payroll each Friday.

That’s why I was pleased last month when Moody’s removed the uplift in credit ratings of the largest bank holding companies that had come from perceived government support. This is a real testament to the work of the Federal Deposit Insurance Corporation and the Federal Reserve, under the leadership of Chairmen Martin Gruenberg and Ben Bernanke and Governor Daniel Tarullo.

Second, due to the U.S. banking regulators working hand-in-hand with international regulators, tougher capital and liquidity standards are becoming a reality. Further, annual stress tests of large banks determine if capital levels are sufficient.

Third, we now have an agency – with the energetic leadership of Richard Cordray – whose key mission is ensuring consumers are protected from predatory lending practices and get a fair deal on financial products from mortgages to credit cards.

Fourth, thanks to the leadership of Chairs Mary Schapiro and Mary Jo White at the Securities and Exchange Commission (SEC), we now have real transparency into the hedge fund world and are addressing the risks of potential runs on money market funds.

Fifth, the swaps market, which was at the heart of the crisis, has been completely transformed. Bright lights of transparency now are shining on the $380 trillion market. The public can see the price and volume of every transaction, like a modern-day tickertape. Regulated trading platforms are trading a quarter of a trillion dollars in swaps each day. And more than 70 percent of the interest rate swaps market is now in central clearing – lowering risk and bringing access to everyone wishing to compete.

Sixth, each of us has been vigorous cops on the beat going after bad actors in the markets. The CFTC, working with the Department of Justice and the SEC, exposed the pervasive rigging of interest rate benchmarks and changed the entire public debate regarding LIBOR and other benchmarks.

I particularly want to thank the members of this council for the strong public policy statements included in the FSOC annual report calling for international regulators and market participants to find and transition to a replacement for LIBOR.

Lastly, is the benefit of this council. Through the leadership of Secretaries Geithner and Lew, and the collaboration of everyone around this table, we have become a real deliberative body. We have enhanced the lines of communication between the agencies, whether it’s the day to day assessing of risks in our financial system or working through the reform agenda. This week, for example, the Volcker Rule will be finalized based on our collaborative work.

Taken as a whole, the Dodd-Frank common-sense rules of the road have been truly transformative. These reforms are helping finance better serve the rest of the economy.

Once again, I want to thank all of you. It has been a real honor to serve with each of you on this council. It’s also an honor to share my last FSOC meeting with my fellow outgoing council member and seatmate, Ben Bernanke.

Thursday, December 5, 2013

FTC CONGRESSIONAL TESTIMONY ON 100TH ANNIVERSARY

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Testifies on Its Work to Protect Consumers and Promote Competition As the Agency Approaches Its 100th Anniversary

The Federal Trade Commission testified before Congress on the agency’s long track record of protecting consumers and promoting competition in the U.S. economy, as well as the agency’s ongoing work and future challenges as it approaches its 100th anniversary next year.

Testifying before the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, FTC Chairwoman Edith Ramirez and Commissioners Julie Brill, Maureen K. Ohlhausen and Joshua D. Wright told lawmakers that the FTC is a highly productive and efficient, small independent agency with jurisdiction to protect consumers and maintain competition in broad sectors of the economy.

“Our agency structure, research capacity, continued commitment to bipartisanship and cooperation, and exceptional staff will allow the FTC to continue to adapt to external changes and successfully fulfill its mission of protecting consumers and competition into its next century,” the testimony states.

President Woodrow Wilson signed the Federal Trade Commission Act and the Clayton Act in 1914, and the FTC opened its doors on March 16, 1915.  The Commission was given enforcement authority and was empowered to conduct investigations, gather information, and publish reports.  Since then, Congress has expanded the FTC’s responsibilities through a number of other statutes, such as the Fair Credit Reporting Act; the Fair Debt Collection Practices Act; and the 1994 Telemarketing and Consumer Fraud and Abuse Prevention Act, which led to establishment of the popular National Do Not Call Registry.

The testimony outlines the FTC’s current work to protect consumers and promote competition.  In recent years, the FTC has emphasized protecting financially distressed consumers from fraud, protecting consumer privacy and data security, prosecuting false or deceptive health claims, and safeguarding children in the marketplace.

In fiscal year 2013, the FTC filed 72 new consumer protection complaints in federal district court and obtained 100 permanent injunctions and orders (including two civil contempt orders) requiring defendants to pay approximately $198 million in consumer redress or disgorgement of ill-gotten gains.

The FTC’s efforts to maintain competition focus on stopping anticompetitive mergers and other anticompetitive business practices in a wide range of industries of critical importance to American consumers, the testimony states.  These include health care, technology, energy, consumer goods and services, and manufacturing.  This work is critical to protect and strengthen free and open markets – the cornerstone of a vibrant economy.

In fiscal year 2013, the agency pursued 27 new competition law enforcement actions (merger and nonmerger) and undertook several important workshops, reports, and advocacy opportunities to promote competition and educate its stakeholders about the importance of competition to consumers.  Over the past three years, the agency estimated that it saved consumers approximately $3 billion in potential price increases by stopping illegal anticompetitive practices and mergers in the marketplace.

Finally, the testimony describes the challenges facing the FTC as it nears its 100th anniversary. In light of resource constraints and a growing workload, the FTC will continue to leverage its resources through careful case selection, by partnering with public and private entities, and by improving its own technological infrastructure to allow its staff to work more effectively, among other things.

The FTC will continue to adapt as technology continues to evolve.  The agency convenes public meetings, such as its recent workshop exploring the Internet of Things, that help the agency to identify the consumer protection and competition issues that may be raised by the use of new technology.

In addition, the testimony states, the FTC will seek to address challenges posed by increased globalization and an international marketplace, and will continue its longstanding initiative to review FTC rules and guides to ensure that they enhance consumer welfare without imposing undue burdens on business.

“As we approach our 100th anniversary, the FTC remains committed to finding ways to enhance its effectiveness in protecting consumers and promoting competition, to anticipate and respond to changes in the marketplace, and to meet current and future challenges,” the testimony states.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

Wednesday, November 13, 2013

JUSTICE SAYS AIRLINE MERGER SETTLEMENT WILL "ENHANCE" COMPETITION

FROM:  U.S. JUSTICE DEPARTMENT  
TO DIVEST FACILITIES AT SEVEN KEY AIRPORTS TO ENHANCE
SYSTEM-WIDE COMPETITION AND SETTLE MERGER CHALLENGE

Divestitures at Airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York and Near Washington, D.C. Opens Door for Low Cost Carriers to Compete Resulting in More Choices and More Competitive Airfares for Consumers

WASHINGTON — The Department of Justice today announced that it is requiring US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. to divest slots and gates at key constrained airports across the country to low cost carrier airlines (LCCs) in order to enhance system-wide competition in the airline industry resulting in more choices and more competitive airfares for consumers.

The department said the proposed settlement will increase the presence of the LCCs at Boston Logan International, Chicago O’Hare International, Dallas Love Field, Los Angeles International, Miami International, New York LaGuardia International and Ronald Reagan Washington National.  Providing the LCCs with the incentive and ability to invest in new capacity and permitting them to compete more extensively nationwide will enhance meaningful competition in the industry and benefit airline travelers.

“This agreement has the potential to shift the landscape of the airline industry. By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country,” said Attorney General Eric Holder. “The department’s ultimate goal has remained steadfast throughout this process - to ensure vigorous competition in airline travel. This is vital to millions of consumers who will benefit from both more competitive prices and enhanced travel options.”

Six state attorneys general–Arizona, Florida, Pennsylvania, Michigan, Tennessee and Virginia–and the District of Columbia joined in the department’s proposed settlement, which was filed in the U.S. District Court for the District of Columbia.  If approved by the court, the settlement will resolve the department’s competitive concerns and the lawsuit.

“The extensive slot and gate divestitures at these key airports are groundbreaking and they will dramatically enhance the ability of LCCs to compete system-wide,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “This settlement will disrupt the cozy relationships among the incumbent legacy carriers, increase access to key congested airports and provide consumers with more choices and more competitive airfares on flights all across the country.”

On Aug. 13, 2013, the department, six state attorneys general and the District of Columbia filed an antitrust lawsuit against US Airways and American alleging that US Airway’s $11 billion acquisition of American would have substantially lessened competition for commercial air travel in local markets throughout the United States.  The department alleged that the transaction would result in passengers paying higher airfares and receiving less service.  In addition, the department alleged that the transaction would entrench the merged airline as the dominant carrier at Reagan National, where it would control 69 percent of take-off and landing slots, thus effectively foreclosing entry or expansion by competing airlines.

The settlement requires US Airways and American to divest slots, gates and ground facilities at key airports around the country.  Specifically, the settlement requires the companies to divest or transfer to low cost carrier purchasers approved by the department:

All 104 air carrier slots (i.e. slots not reserved for use only by smaller, commuter planes) at Reagan National and rights and interest in other facilities at the airport necessary to support the use of the slots;

Thirty-four slots at LaGuardia and rights and interest in other facilities at the airport necessary to support the use of the slots; and

Rights and interests to two airport gates and associated ground facilities at each of  Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International.

The Reagan National and LaGuardia slots will be sold under procedures approved by the department.  Under the terms of the settlement, JetBlue at Reagan National and Southwest at LaGuardia will be given the opportunity to acquire the slots they currently lease from American.  The remaining 88 slots at Reagan National and 24 slots at LaGuardia plus any JetBlue or Southwest decline to acquire will be grouped into bundles, taking into account specific slot times to ensure commercially viable and competitive patterns of service for the recipients of the divested slots.  The parties will divest these slot bundles and all rights and interests in any gates and other ground facilities (e.g., ticket counters, baggage handling facilities, office space and loading bridges) as necessary to support the use of the purchased slots.

The gates at the five airports will be transferred on commercially reasonable terms to the new acquirers.  The acquirers of the slot and gate divestitures also require approval of the department.  Preference will be given to airlines at each airport that do not currently operate a large share of slots or gates.

The proposed settlement allows the department to appoint a monitoring trustee to oversee the divestitures or transfers of the slots and gates. The settlement also prohibits the merged company from reacquiring an ownership interest in the divested slots or gates during the term of the settlement.  The companies must also provide advance notice of any future slot acquisition at Reagan National regardless of whether or not it is a reportable transaction under the premerger notification law and further provides for waiting periods and opportunities for the department to obtain additional information in order to review the transaction.

AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas.  AMR is the parent company of American Airlines.  Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue.  In November 2011, American filed for bankruptcy reorganization.

US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz.  Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.

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