I agree that there will be antitrust hurdles; but that they will not be a deal-breaker (they have other problems to worry about, like bankruptcy creditors). Attorneys from the DOJ have said in the past, that if they knew the aftermath of 9/11 before the United/USAirways proposed merger, they would have decided differently. Furthermore, most antitrust attorneys in the private sector agree that consolidation is necessary.
Also, I disagree with your 'precedent analysis'. Antitrust issues are usually not set as 'precedent' within industries because the industry, particularly the airline industry, changes every time a new competitor comes or a competitor goes. For example, the DOJ may think that a merger will help the industry now; but that will not hold true (as precedent) if United wants to merge with the new company next year. Remember, that test you speak of, is a test that is easily molded to fit the DOJ's point of view... and right now the DOJ seems to suggest that they welcome a merger. But if this one goes through, they will not allow another major merger unless more competitors enter the market.
I disagree with your premise entirely.(well, usually in every instance that you post). This is USAirways No.#5 attempting to merge with Delta No. 2. Potentially becoming THE biggest monopoly on the East corridor.
The point of having oversight and "anti-trust" laws is to ensure that a "monopoly" is not formed. From my research, exposure to mergers and potential mergers being in this industry for a quarter century, and at the "table", the oversight is for the purpose of preventing monopolies from forming. Allowing mergers can often lead to higher prices, reduced availability of goods or services, lower quality of products, and less innovation. Indeed, some mergers create a concentrated market, while others enable a single firm to raise prices.
In a concentrated market, where there are only a few firms. The danger is that they may find it easier to lessen competition by colluding. For example, they may agree on the prices they will charge consumers. The collusion could be in an explicit agreement, or in a more subtle form -- known as tacit coordination or coordinated interaction. Firms may prefer to cooperate tacitly rather than explicitly because tacit agreements are more difficult to detect, and some explicit agreements may be subject to criminal prosecution. When a merger enables a single firm to increase prices without coordinating with its competitors, it has created a unilateral effect. A firm might be able to increase prices unilaterally if it has a
large enough share of the market, if the merger removes its closest competitor, and if the other firms in the market can’t provide substantial competition. That's what I view in this instance.
Generally, at least two conditions are necessary for a merger to have a likely
anticompetitive effect: The market must be substantially concentrated after the merger; and it must be difficult for new firms to enter the market in the near term and provide effective competition. The reason for the second condition is that firms are less likely to raise prices to anticompetitive levels if it is fairly easy for new competitors to enter the market and drive prices down.
What you imply is that this merger has a great chance of passing with little or no objection from the DOJ. That's wishful thinking. I can't understand why you think you have some pre-destined knowledge that the DOJ will undoubtely welcome this without a blink just because we are post 9/11. When a monopoly exists, it is very difficult for smaller companies to offer the same service and pricing and last as long as a huge conglomerant, thus not existing long enough to have a competitive effect.
Its like putting a Lemondade stand in front of the Coca Cola company hoping that folks choose lemonade for cheaper price and drive Coca Cola's business and pricing down.
And Jesus man, what leads you to believe that if the US/United deal would have gone through, and 9/11 ocurred with this merger that Bankruptcies, furloughs, shrinkage would not have happened anyway. What makes you think that US/UAL merger would somehow withstand the devestating effects from those post 9/11 years????? I believe the whole entity would have gone over the cliff quicker together vs. being solo and emerging solo. Retrospective, US/UAL were not the best fit.
Bigger does not mean better, stronger sustaining power, more resiliant to a down turn. Just a harder, faster, widespread disaster going down when the tides turn, as they usually do.
