Airline stocks down sharply - DOJ reportedly to block AMR/LCC

[USFlyer]

Having the DOJ say they don't like what they see now is not an acceptable reason; the simple fact that the current merger proposal is deemed to be uncompetitive is sufficient.

But now the DOJ needs to PROVE this in Court, not just state an opinion has it has done thus far. Proving this will require a lot of painstaking detail that is subject to cross examination.

 

[USFlyer]

Have profitable companies is other industries been allowed to merge?

Yes, but this is not a factor, or should not be a factor, in the DOJ's analysis of this merger.

 

[jimntx]

Where has the failing company doctrine been cited by anyone? This is the first I'm hearing that this was a basis for the merger. It wasn't, from everything I've read.

The point is not that anyone has used that argument. The DOJ is cutting off that "avenue of escape" before it can be used in court.

It's like the prosecutor who points out the millions of abused kids who don't grow up to be murderers before the defense can use that as a justification for the defendant's actions.

 

[jimntx]

But now the DOJ needs to PROVE this in Court, not just state an opinion has it has done thus far. Proving this will require a lot of painstaking detail that is subject to cross examination.

And, they have it in the form of recorded telephone conversations and emails by company executives. You can all just get over your paranoid belief that the DOJ is doing this because they hate US Airways/American Airline/Doug Parker/or any combination of those. The DOJ has filed this suit because they have evidence that they believe supports their case. How many times have you seen them choose to NOT file a case because they have been unable to uncover sufficient evidence that supports a criminal or civil charge. The DOJ regardless of who is President does not waste its time filing frivolous lawsuits.

And, since you seem to have all the answers, perhaps you should take a leave, file an amicus curiae, and set the judge and the DOJ straight.

 

[700UW]

And they thought they had OJ. Delorean and Zimmerman too, now didnt they?

Nothing is certain when it goes to court, and you can bet US/AA has all ready been working on this before the lawsuit and have probably hired the best merger and anti-trust law firms money can buy.

 

[FWAAA]

And they thought they had OJ. Delorean and Zimmerman too, now didnt they?

Nothing is certain when it goes to court, and you can bet US/AA has all ready been working on this before the lawsuit and have probably hired the best merger and anti-trust law firms money can buy.

This isn't a criminal case where introducing some reasonable doubt in the jury's minds will get you home free.

This is a civil case where preponderance of the evidence is the standard. All the government has to do is convince the judge that the merger will be more likely than not to substantially lessen competition and the government wins.

 

[ContUNITEus]

Something tells me that US Airways/AmericaWest and the AA execs pushing for this were completely caught off guard.

I don't think anyone had a clue that the DOJ was going to do a such a spectacular preemptive strike against Dougiee... I love the surprise element in all of this.

 

[USFlyer]

This isn't a criminal case where introducing some reasonable doubt in the jury's minds will get you home free.

This is a civil case where preponderance of the evidence is the standard. All the government has to do is convince the judge that the merger will be more likely than not to substantially lessen competition and the government wins.

Which I submit will be difficult to do. The Government rarely wins these cases -- it's very tough to prove what "could happen" more likely than not -- which is why these are usually settled out of Court. This is not like other civil cases, where you are working to prove what "did happen".

 

[700UW]

Past Practice means a lot, you let DL/NW, UA/CO and WN/FL merge, so US and AA have a lot on their side when the DOJ did nothing to stop the other mergers.

 

[USFlyer]

And, since you seem to have all the answers, perhaps you should take a leave, file an amicus curiae, and set the judge and the DOJ straight.

I don't work for US Airways or American. I work for the government here in DC. No need for me to take a leave.

 

[EastUS1]

The DOJ regardless of who is President does not waste its time filing frivolous lawsuits.

That's understandable, what with all the demands already on Holder's time, spent running guns to mexican drug lords. Indeed. WHO could possibly ever even imagine some/ANY friviolous political agenda coming from that august body of only the finest minds and grandest souls?

What the actual agenda here is can only be speculated on, but it's most certainly NOTHING at all related to even the slightest concerns for the flying public...which are already so tenderly evidenced by government instituted TSA abuse/etc.

 

[Phoenix]

that is correct and the lawsuit will be about the law, not economics of the industry, esp. forwarding looking predictions of how a company might do as justification for a merger today. FWAAA is correct that mergers are not predicated on trying to determine some sort of future outcome for the industry, including whether AA or US can ever compete against DL and UA.

There is also no legal basis for arguing that the industry should have 3 network carriers or similar size plus WN. None.

The DOJ's case must be based on consolidation as it would exist today as a result of this merger and most specifically the uncompetitive nature of this merger...

and will due respect the verbal and written evidence the DOJ trotted out regarding expectations of higher fares and attempts to eliminate consumer-friendly competitive actions makes it VERY hard for AA and US to overcome whatever economic argument they might have been able to use. The fact that US' existence for much of its time since BK has been based on undercutting other carriers is key evidence that they have managed to succeed so far (and profitably so) yet walking away from that business strategy thru a merger would be damaging to consumers. IOW, perhaps US should have thought thru the long-term implications of being a bottom feeder in the airline industry and the role they would be locked into by doing so.

I'm not sure people here really grasp how damaging it is for a government official to hear that the merger will result in fewer choices for consumers and higher prices which is EXACTLY what a number of the internal documents AA/US produced and which were uncovered by the DOJ said.

As much as AA and US want to try to shift the argument to economic matters including the "unfairness" of DL, UA, and WN getting a merger but AA/US being denied, there was clear evidence that was presented regarding the uncompetitive effects of the AA/US merger which simply were not presented regarding other mergers.

OTOH the DOJ needs to drop its argument about "we've looked at the industry and decided we don't like what we see after consolidation" because that is problematic. At the same time, there never was any requirement on the DOJ that they had to approve subsequent mergers if they approved the first three. There is absolutely no legal basis for saying that AA/US should be approved because the others did. Having the DOJ say they don't like what they see now is not an acceptable reason; the simple fact that the current merger proposal is deemed to be uncompetitive is sufficient.

This has absolutely nothing to do with the gubment protecting the consumer citizens. Holder crying poor mouth for the consumer is like Shapton and Jackson belly aching for their "beloved constituents".

 

[signals]

Gee the gov fears that this will raise ticket prices. As opposed to what? Nickel-and-diming the sheep by charging for anything from luggage to your seat to the air you breathe??? Not about US but about your industry in general.

I have no doubt that this merger will happen, but somehow the gov wants more than it's share. Never mind that B6 has come up with a solution to the lost luggage. Charge to deliver people's luggage to where they are within a 40 mile radius of the airport. Correct me if I'm wrong, but lost and recovered luggage is delivered for free. Now you have stupid people who pay for convenience offsetting B6's lost luggage cost. BRILLIANT!

But the DOJ, that has no IQ, has a problem with a merger that doesn't involve Delta!!!

 

[im back..!!]

that is correct and the lawsuit will be about the law, not economics of the industry, esp. forwarding looking predictions of how a company might do as justification for a merger today. FWAAA is correct that mergers are not predicated on trying to determine some sort of future outcome for the industry, including whether AA or US can ever compete against DL and UA.

There is also no legal basis for arguing that the industry should have 3 network carriers or similar size plus WN. None.

The DOJ's case must be based on consolidation as it would exist today as a result of this merger and most specifically the uncompetitive nature of this merger...

and will due respect the verbal and written evidence the DOJ trotted out regarding expectations of higher fares and attempts to eliminate consumer-friendly competitive actions makes it VERY hard for AA and US to overcome whatever economic argument they might have been able to use. The fact that US' existence for much of its time since BK has been based on undercutting other carriers is key evidence that they have managed to succeed so far (and profitably so) yet walking away from that business strategy thru a merger would be damaging to consumers. IOW, perhaps US should have thought thru the long-term implications of being a bottom feeder in the airline industry and the role they would be locked into by doing so.

I'm not sure people here really grasp how damaging it is for a government official to hear that the merger will result in fewer choices for consumers and higher prices which is EXACTLY what a number of the internal documents AA/US produced and which were uncovered by the DOJ said.

As much as AA and US want to try to shift the argument to economic matters including the "unfairness" of DL, UA, and WN getting a merger but AA/US being denied, there was clear evidence that was presented regarding the uncompetitive effects of the AA/US merger which simply were not presented regarding other mergers.

OTOH the DOJ needs to drop its argument about "we've looked at the industry and decided we don't like what we see after consolidation" because that is problematic. At the same time, there never was any requirement on the DOJ that they had to approve subsequent mergers if they approved the first three. There is absolutely no legal basis for saying that AA/US should be approved because the others did. Having the DOJ say they don't like what they see now is not an acceptable reason; the simple fact that the current merger proposal is deemed to be uncompetitive is sufficient.

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Maybe the justice dept needs to do what they did in earlier times and bust up some behemoth companies, spread the resources....

 

[im back..!!]

And they thought they had OJ. Delorean and Zimmerman too, now didnt they?

Nothing is certain when it goes to court, and you can bet US/AA has all ready been working on this before the lawsuit and have probably hired the best merger and anti-trust law firms money can buy.

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So you name 3 criminals that were guilty yet got off to prove what point? that justice is not only blind but also stupid?