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From Antitrust Law Daily, June 10, 2014

Rejected bidder for FBO services at airport failed to establish antitrust injury

By Jeffrey May, J.D.

A company whose proposal to provide “fixed-base operator” (FBO) services at a small Colorado airport was rejected lacked standing to pursue antitrust claims against the county and the winning bidder, the U.S. Court of Appeals in Denver has decided. Summary judgment in favor of the defendants was affirmed in a per curiam opinion, supported by the concurring opinions of two circuit court judges (JetAway Aviation, LLC v. The Board of County Commissioners of the County of Montrose, Colorado, June 9, 2014, Per Curiam).

The dispute followed Montrose County’s decision to privatize FBO services at the county-run airport. An FBO provides a variety of aircraft-related services, such as fueling, hangaring, parking, aircraft rental, aircraft maintenance, and flight instruction. From 1991 to January 2006, the county ran the FBO at the airport.

In response to a request-for-proposals, the county received bids from JetAway Aviation, LLC and Jet Center Partners, LLC (JCP). The county officially privatized FBO services at the airport, rejected a bid from JetAway, and entered into an FBO agreement with JCP, under which JCP assumed the county’s role of operating the single on-airport FBO. JetAway's attempts to become a second FBO service provider at the airport were purportedly thwarted by JCP. In addition, the county adopted revised airport standards that, according to JetAway, made it difficult (if not impossible) for JetAway or any other FBO service provider to effectively compete with JCP. The county also obtained an injunction that prevented JetAway from accessing airport property, and JetAway’s off-airport operation closed. JetAway later brought antitrust claims against the Montrose County board and building authority, as well as JCP and other private actors.

The per curiam opinion affirmed the district court's decision to grant summary judgment in favor of the defendants (2012-1 Trade Cases ¶77,855) on the ground that JetAway lacked antitrust standing to bring the action. Judge Jerome A. Holmes and Judge Timothy M. Tymkovich wrote separate concurring opinions, explaining their differing reasons for affirming the judgment. These two judges acted as a quorum, after the third judge on the panel—Senior Judge William J. Holloway, Jr.—died before the opinions in the case were finalized.

Holmes concurrence. The replacement of one monopolist by another monopolist in the airport’s FBO services market—a market that naturally could support only one firm—did not adversely affect competition, Judge Holmes concluded. Therefore, JetAway did not have antitrust standing to bring any of its antitrust claims.

Judge Holmes noted that JetAway's own expert concluded that the market could only support one FBO provider. If there had been a period of competition between JetAway and JCP, it would have been a short one. Thus, any purported deprivation of consumers of the benefits of competition was of no material significance for purposes of determining the presence of antitrust injury. The focus of the Sherman Act was on long-run anticompetitive effects, in Judge Holmes's view.

Judge Holmes also rejected JetAway’s argument that the quality and quantity of a monopolist’s products and services should be considered in the antitrust injury inquiry. “[E]ven if JetAway would have been a better monopolist for consumers in the sense that it would have provided a more diverse, higher-quality array of FBO services, it cannot be said that Defendants’ conduct harmed competition; thus JetAway cannot establish an antitrust injury.” Judge Holmes refused to evaluate whether JetAway would have been a better monopolist than JCP.

In conclusion, Judge Holmes acknowledged the possibility that an antitrust injury may result from the conduct of market participants in a “substitute-monopolist” scenario. However, an antitrust injury was not present under the current circumstances.

Tymkovich concurrence. Judge Tymkovich also would uphold summary judgment in favor of the defendants for lack of standing. However, Judge Tymkovich reasoned that JetAway failed to state an antitrust injury based on its efforts to join the airport’s monopoly over services on its premises because seeking to join a monopoly does not benefit consumers.

Judge Tymkovich disagreed with the notion that JetAway's entire case was about seeking to merely substitute one monopoly for another. JetAway also challenged the defendants’ post-bid efforts to prevent it from becoming a second FBO.

The market for purposes of analyzing the claims was more properly defined to include the full cluster of interrelated services that the airport offers, rather than FBO services at the airport, according to Judge Tymkovich. “Without its narrowly constructed market definition, JetAway has no Sherman Act claim based on defendants’ efforts to thwart JetAway’s desire to establish an FBO at the Airport.”

JetAway alleged two distinct anticompetitive injuries: (1) efforts allegedly to corrupt the bid process, and (2) efforts allegedly to maintain JCP as the exclusive FBO. Neither allegation satisfied the “competition-reducing” requirement to establish antitrust injury, according to Judge Tymkovich.

The cases are Nos. 12-1173 and 12-1194.

Attorneys: James M. Lyons (Lewis Roca Rothgerber LLP) and Mark E. Haynes (Ireland Stapleton Pryor & Pascoe, PC) for JetAway Aviation, LLC. Bobbee J. Musgrave (Bryan Cave HRO) for the Board of County Commissioners of the County of Montrose, Colorado, and Montrose County Building Authority. Kathryn A. Reilly (Husch Blackwell LLP) Jet Center Partners, LLC.

Companies: JetAway Aviation, LLC; Board of County Commissioners of the County of Montrose, Colorado; Montrose County Building Authority; Jet Center Partners, LLC.

MainStory: TopStory Antitrust ColoradoNews KansasNews NewMexicoNews OklahomaNews UtahNews WyomingNews

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