Judge Refuses To Dismiss DOJ’s Antitrust Suit Against JetBlue and American Airlines
The government’s lawsuit attempting to end the airlines’ Northeast Alliance will go to court in September.
U.S. District Judge Leo Sorokin rejected a joint bid by JetBlue (NASDAQ: JBLU) and American Airlines (NASDAQ: AAL) earlier this week to dismiss an antitrust lawsuit brought against them by the Department of Justice and attorney generals of six states—Arizona, California, the District of Columbia, Florida, Massachusetts, Pennsylvania, and Virginia.
This means the DOJ will have its day in court against the two airlines come September 26, when they seek to have the companies unwind their Northeast Alliance, which the DOJ has said is anticompetitive.
The alliance operates at four major airports:
- Logan International Airport in Boston (KBOS)
- John F. Kennedy International Airport (KJFK) and LaGuardia Airport (KLGA) in New York
- Newark Liberty International Airport in New Jersey (KEWR).
Though the Department of Transportation approved the alliance in January 2021, antitrust regulators sued in September, saying American and JetBlue entered into an "unprecedented and anticompetitive pact," and instead labeled it a "de facto merger."
In a two-page order, Judge Sorokin said the concerns the DOJ and the attorney general brought up were valid enough to go to trial.
"The complaint alleges—plausibly and in a manner that is neither conclusory nor threadbare—that the alliance at issue between American and JetBlue is likely to harm competition in the relevant markets and that American and JetBlue control a significant share in an already concentrated market," Judge Sorokin said in his order.
In February, JetBlue and American said the DOJ needed to prove that the alliance was harming consumer choice and that the DOJ was withholding evidence against them from its investigation. The DOJ responded that it had only begun the discovery process and would provide evidence as things proceeded.
JetBlue’s Other Focus
Between now and September, JetBlue will have its hands full. The company has launched an unrelenting campaign to acquire Spirit Airlines (NYSE: SAVE), which Spirit has rebuffed. For its part, Spirit also cites the DOJ case against JetBlue as to why a combination between them would attract similar antitrust scrutiny. Instead, Spirit would prefer to merge with Frontier (NASDAQ: ULCC), which announced plans to acquire Spirit in February before JetBlue entered the negotiations.
After JetBlue sweetened its offer to Spirit shareholders this week with an extra $150 million, Spirit delayed its vote on the Frontier merger, which would've taken place Friday, to June 30.
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