OBERSTAR: PROPOSED AMERICAN-TWA DEAL A “DEFENSIVE MERGER”
OBERSTAR: PROPOSED AMERICAN-TWA DEAL A “DEFENSIVE MERGER”
Rep. James L. Oberstar, D-Minn. said the pending merger of American Airlines and Trans World Airlines is evidence that the earlier proposed merger of United and US Airways has sparked a wave of “defensive mergers by United competitors.”
Oberstar, the ranking Democrat of the House Transportation and Infrastructure Committee, said “American apparently feels impelled to develop its own merger proposals to reduce the potential advantages United would gain from acquiring US Airways.”
He predicts that the resulting industry consolidation would “reduce the industry to three major airlines that would be unlikely to compete vigorously.”
Oberstar acknowledged that details of the proposed American-TWA merger are preliminary. However, he called for “careful consideration of the effects on competition, both direct competition between the two carriers, and the effect that the merger would have on triggering defensive mergers by the rest of the industry.”
