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- From: ndallen@r-node.gts.org (Nigel Allen)
- Subject: U.S. Justice Department Files Price Fixing Suit Against Eight Airlines and Fare Dissemination System
- Message-ID: <1992Dec22.090236.16056@r-node.gts.org>
- Organization: Echo Beach, Toronto
- Date: Tue, 22 Dec 1992 09:02:36 GMT
- Lines: 75
-
- Here is a press release from the U.S. Department of Justice.
-
- Justice Department Files Price Fixing Suit Against Eight Airlines
- and Fare Dissemination System
- To: Business Desk
- Contact: Gina Talamona of the U.S. Department of Justice,
- 202-514-2007
-
- WASHINGTON, Dec. 21 -- The Department of Justice today
- filed a civil antitrust suit against eight of the largest U.S.
- airlines and a data exchange system for alleged price fixing. The
- suit also alleged that the airlines are operating a computerized fare
- exchange system in a manner that unreasonably restrains price
- competition in the $40 billion domestic air passenger transportation
- industry.
- The complaint was filed in U.S. District Court in Washington, D.C.
- At the same time, the department filed a proposed consent decree that
- would settle the suit against two of the airlines.
- The airlines named as defendants in the civil suit are: American
- Airlines Inc. of Forth Worth, Texas; United Air Lines Inc. of Elk
- Grove Village, Ill.; Delta Air Lines Inc. of Atlanta, Georgia;
- Northwest Airlines Inc. of St. Paul, Minnesota; USAir Inc. of
- Arlington, Virginia; Continental Airlines Inc. of Houston, Texas;
- Trans World Airlines Inc. of Mt. Kisco, New York; and Alaska
- Airlines Inc. of Seattle, Washington. The proposed consent decree
- would settle the suit against United Air Lines and USAir.
- Airline Tariff Publishing Company (ATP) headquartered in
- Chantilly, Virginia, also was named as a defendant. ATP is an
- airline fare data collection and dissemination service owned by a
- group of airlines that includes the eight defendant airlines.
- The complaint alleges that beginning at least as early as April
- 1988, and continuing through at least May 1990, the airline
- defendants at various times agreed to increase particular fares and
- eliminate particular discounts for travel between specific cities,
- so-called "city pairs."
- The complaint also alleged that beginning as early as April 1988,
- and continuing to the present, the defendants combined to create and
- operate the ATP system in a manner that allowed the airlines to
- better coordinate their pricing.
- J. Mark Gidley, Acting Assistant Attorney General in charge of the
- Antitrust Division, said, "Using ATP, the airlines were able to
- engage in an elaborate dialogue with one another about future fares.
- The airlines engaged in a process that involved repeated exchanges
- through ATP of price increase proposals and counterproposals, with
- the effect of raising fares to consumers. For example, by using
- ATP, airlines communicated the details of proposed fare increases to
- competitors and obtained their reactions. These discussions often
- continued until there was an agreement on a higher fare," said
- Gidley.
- In particular, the airlines used the first and last ticket date
- provisions of ATP to reach agreement on fares. A first ticket date
- is the earliest date the public is permitted to purchase a ticket.
- Because the airlines often used future first ticket dates, the fares
- were not yet available for sale. According to Gidley, this aspect of
- ATF allowed the airlines to discuss and agree on fares before they
- were offered to the public.
- A similar feature of ATP enabled airlines to agree to eliminate
- discount fares. A last ticket date is the last date a particular
- fare can be sold to the public. By using last ticket dates and other
- means in ATP, the airlines would negotiate the elimination of
- discounts.
- Under the proposed consent decree, the two settling airlines,
- United and USAir, would stop using first ticket dates. The settling
- airlines also would stop using last ticket dates, except to advertise
- the ending date of a new promotional fare. The proposed consent
- decree also includes prohibitions that prevent the use of other
- methods to communicate future pricing intentions and to negotiate
- coordinated fare changes.
- For the decree to become effective, the court must approve the
- proposed consent decree following expiration of a 60-day comment
- period in compliance with the Antitrust Procedures and Penalties Act.
- The antitrust enforcement action is a result of the department's
- intensive three-year investigation of airline pricing practices.
- -30-
- --
-