Justice clears United, Continental merger
The U.S. Justice Department said Friday it has closed its investigation into the proposed merger of UAL Corp., parent of United Airlines, and Continental Airlines, effectively allowing the merger to proceed.
The decision by United, the third-largest U.S. carrier, and Continental, the fourth-largest, to transfer takeoff and landing slots and other assets at Newark Liberty Airport in New Jersey to Southwest Airlines alleviated concerns about concentration of power in that market, the Justice Department said.
United, with $16.3 billion in revenue last year, and Continental, $12.6 billion, said May 2 they planned to combine and form the world's largest airline.
• United, Continental unite
Analysis by Justice's Antitrust Division indicated the two airlines had mostly complementary networks with a limited amount of overlap where they offer competing nonstop service. The largest such routes are between United's hub airports and Continental's hub at Newark, where Continental has a high market share and there is limited availability of landing and takeoff rights, making entry for other airlines difficult.
Southwest previously had limited service in the New York metropolitan region and no Newark service.
Several state attorneys general are also reviewing the impact of the proposed merger.
Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, called the decision 'regrettable.' He had asked the Justice Department to reject the deal, claiming consolidation paired with international alliances will leave consumers with little choice and higher fares.
Oberstar said future merger reviews need to extend beyond the narrow antitrust criteria used by the Justice Department. He called for the government to give broader authority over such mergers to the Department of Transportation to consider such factors as the impact of a merger on service to communities and customers, as well as the effect the merger could have on the industry as a whole by triggering more consolidation attempts.
The Minnesota Democrat said large carriers would refrain from seriously competing in markets dominated by one of the other carriers.
He also suggested Congress should consider reregulating the airline industry 32 years after deregulation in order to improve service and competition.