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From Antitrust Law Daily, October 2, 2013

Texas Attorney General settles challenge to American Airlines/US Airways merger

By Tobias J. Gillett, J.D., LL.M.

In exchange for an agreement by AMR Corp. and US Airways Group, Inc. to continue daily service to certain Texas airports and to maintain the headquarters for their merged entity in the Dallas-Fort Worth metropolitan area, the Texas Attorney General has agreed to drop its challenge to the airlines’ proposed combination, the Attorney General announced yesterday.

Under the terms of the settlement agreement, the Attorney General will dismiss its claims in an action filed by the U.S. Department of Justice and the Attorneys General of Arizona, Florida, Michigan, Pennsylvania, Tennessee, Texas, and the District of Columbia, claiming that the airlines’ proposed merger would violate Section 7 of the Clayton Act.

In return, AMR and US Airways have agreed to maintain scheduled daily service to 22 Texas airports: Abilene Regional Airport, Austin-Bergstrom International Airport, Brownsville/South Padre Island International Airport, Corpus Christi International Airport, Dallas Fort Worth International Airport, East Texas Regional Airport, Easterwood Airport, El Paso International Airport, Houston William P. Hobby Airport, Houston George Bush Intercontinental Airport, Jack Brooks Regional Airport, Killeen-Fort Hood Regional Airport, Laredo International Airport, Lubbock Preston Smith International Airport, McAllen-Miller International Airport, Midland International Airport, Rick Husband Amarillo International Airport, San Angelo Regional Airport, San Antonio International Airport, Tyler Pounds Regional Airport, Waco Regional Airport, and Wichita Falls Regional Airport.

In addition to retaining service to those airports, AMR and US Airways have committed to maintaining Dallas/Fort Worth International Airport as a “large hub airport,” and to maintain the headquarters for their merged entity in the Dallas Forth Worth metropolitan area. The agreement will terminate three years after AMR and US Airways close their merger.

According to a statement released by the Texas Attorneys General’s Office, the legal action “was prompted by concerns about the potential for reduced airline service to several of Texas’ smaller airports,” including the airports at Killeen, San Angelo, and Abilene, which are heavily frequented by service members from Fort Hood, Goodfellow Air Force Base, and Dyess Air Force Base.

“From the beginning, our focus has been on maintaining service to rural airports in Texas and protecting Texas jobs,” stated Attorney General Greg Abbott. “Today’s agreement ensures that thousands of jobs will remain in Texas and that Texans traveling by air—especially those who fly in and out of rural cities across the state, including members of the military—will continue to benefit from daily flight service. The settlement secures common-sense concessions that are in the best interests of our great State.”

On August 13, the Justice Department Antitrust Division, six states, and the District of Columbia filed a complaint, seeking to block the planned merger of two of the nation’s five major airlines. An amended complaint, adding the State of Michigan as a plaintiff, was filed on September 5. The government has alleged that the proposed transaction would eliminate actual and potential competition between US Airways and American Airlines and would increase coordinated behavior among the remaining carriers.

Companies: AMR Corp.; US Airways Group, Inc.

MainStory: TopStory Antitrust TexasNews

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