Newspaper editorial writers in New York, Washington, D.C., and Dallas are playing Monday morning quarterback, assessing this week’s antitrust litigation settlement that will allow American Airlines to merge with US Airways. The debate centers on which side “won.”
Some say it was a victory for the government, because lower cost airlines like Southwest and JetBlue will now have more flights to and from major airports—flights that the merging airlines were forced to surrender under the DOJ’s threat of an injunction forbidding the merger altogether. Others say it was an embarrassing defeat for the government, because the airlines got away with relatively minor concessions for the privilege of raking in an estimated billion dollars in “annual net synergies.”
These discussions, while interesting, miss an important point. As things stand, all sides take for granted the validity of antitrust law. Although opinions diverge when it comes to individual cases, the consensus view is that antitrust provides needed remedies for actual legal wrongs. But when we stop to look closely at the facts, and then look again, it turns out there are no actual violations of rights on which a lawsuit could properly be based.
Consider the airline merger: When the two companies proposed earlier this year to merge their businesses, they did not violate other airlines’ right to stop competitors from growing—there is no such right. The companies did not violate airline passengers’ right to dictate prices and routes at airports around the country—there is no such right. The airlines certainly did not violate politicians’ right to influence what flights will be available at their favorite airports—there is no such right. The proposed merger did not violate any contracts, did not perpetrate any fraud, did not trespass on anyone’s property or steal anyone’s money. So where’s the basis in reality for the DOJ’s lawsuit?
I would like to see the antitrust establishment try to make the case that anyone’s actual rights were violated by the airline merger proposal. I would like to see them name the right, validate it from the ground up, and defend its logical consequences. If they can do it, let’s debate the strength of their case. But if they can’t, then let’s debate whether the antitrust laws deserve to survive.