First Circuit Affirms End to “Naked Restraint of Trade” by American, JetBlue
The Department of Justice Antitrust Division secured a victory in the final weeks of the Biden administration with the affirmation of a decision blocking American Airlines and JetBlue from continuing their anticompetitive Northeast Alliance. Attorneys general from six states and the District of Columbia sued to stop the airlines’ agreement not to compete in Boston and New York. The government attorneys said eliminating competition in many domestic markets was a violation of Section 1 of the Sherman Act.
The Fifth Circuit Court of Appeals affirmed the decision of U.S. Judge Leo T. Sorokin who found the pair were acting as one company, replacing “full-throated competition” with “broad coordination” of business in and out of the two busy Northeast cities. That coordination included trading information on which routes to fly, which company would fly them, and the seating capacity needed to accommodate passengers. Following several weeks of trial, the judge found the companies failed to produce evidence to support any procompetitive effects they claimed justified the arrangement.
“To the defendants, competition is enhanced if they join forces to unseat a powerful rival,” Judge Sorokin wrote, referring to Delta Air Lines. “The Sherman Act, however, has a different focus. Federal antitrust law is not concerned with making individual competitors larger or more powerful. It aims to preserve the free functioning of markets and foster participation by a diverse array of competitors. Those principles are generally undermined, rather than promoted, by agreements among horizontal competitors to dispense with competition and cooperate instead. That is precisely what happened here.”