[Federal Register Volume 59, Number 125 (Thursday, June 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15910]


[[Page Unknown]]

[Federal Register: June 30, 1994]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE
[Civil Action No. 92-2854 (GHR), D.D.C.]

 

United States v. Airline Tariff Publishing Company, et al.; 
Public Comments and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States publishes below a comment received on the 
proposed Final Judgment in United States v. Airline Tariff Publishing 
Company, et al., Civil Action No. 92-2854 (SSH), United States District 
Court for the District of Columbia, together with the response of the 
United States to the comments.
    Copies of the response and the public comments are available on 
request for inspection and copying in room 3235 of the Antitrust 
Division, U.S. Department of Justice, Tenth Street and Pennsylvania 
Avenue, NW., Washington, DC 20530, and for inspection at the Office of 
the Clerk of the United States District Court for the District of 
Columbia, United States Courthouse, Third Street and Constitution 
Avenue, NW., Washington, DC 20001.
Constance K. Robinson,
Director of Operations.

United States' Response To Public Comments

    United States of America, Plaintiff, v. Airline Tariff 
Publishing Company, et al., Defendants.

    Pursuant to section 2(d) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. 16(d) (the `APPA'' or ``Tunney Act''), the United States 
responds to public comments on the proposed Final Judgement submitted 
for entry in this civil antitrust proceeding.
    This action began on December 21, 1992, when the United States 
filed a Complaint charging eight major domestic airlines\1\ and the 
Airline Tariff Publishing Company (``ATP'') with violations of the 
antitrust laws. The first count of the Complaint alleges that each of 
the airline defendants engaged in various combinations and conspiracies 
with other of the airline defendants and co-conspirators, consisting of 
agreements to fix prices by increasing fares, eliminating discounted 
fares, and setting fare restrictions. The Complaint alleges that these 
agreements were reached using the computerized fare dissemination 
services of ATP to exchange proposals, negotiate fare changes, and 
trade fare increases in one or more markets for fare increases in other 
markets (or to other fare types). As a result of these agreements, 
consumers paid higher fares for airline tickets.
---------------------------------------------------------------------------

    \1\American Airlines, Inc., Alaska Airlines, Inc., Continental 
Airlines, Inc., Delta Air Lines, Inc., Northwest Airlines, Inc., 
Trans World Airlines, Inc., United Air Lines, Inc., and USAir, Inc.
---------------------------------------------------------------------------

    The second count of the Complaint alleges that the airline 
defendants, ATP, and co-conspirators engaged in a combination and 
conspiracy consisting of an agreement to create, maintain, operate, and 
participate in the ATP fare dissemination system in a manner that 
unnecessarily facilitates the ability of the airline defendants and 
their co-conspirators to coordinate changes to their fares. As a result 
of this agreement, consumers have paid higher prices for airline 
tickets.
    The Complaint seeks an injunction barring the defendants from 
entering into agreements with one another with respect to fares, and 
from disseminating the information concerning proposed changes to fares 
that has enabled them to increase prices collusively and illegally.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment, a Competitive Impact Statement 
(``CIS''), and a stipulation signed by two of the defendants, United 
and USAir, for entry of a proposed Final Judgement. After reviewing the 
proposed Final Judgment pursuant to the Tunney Act, the Court concluded 
that the Judgment was in the public interest within the meaning of the 
Tunney Act, and it became final with respect to United and USAir on 
November 1, 1993.
    On March 17, 1994, the United States, ATP, Alaska, American, 
Continental, Delta, Northwest, and TWA filed with the Court a 
Stipulation consenting to the entry of a new proposed Final Judgment 
with respect to the remaining defendants. This proposed Final Judgment 
is substantially identical to the Final Judgment entered against United 
and USAir with the following exceptions. Section V(B) clarifies that 
the proposed Final Judgment does not prohibit an airline defendant from 
selling management services to another airline. Section V(C) permits 
the airline defendants to disseminate last ticket dates through ATP in 
some specified circumstances where the United/USAir decree prohibits 
the use of last ticket dates. The record keeping provisions in Section 
VI(E) have been changed to reflect the changes to Section V(C). 
Finally, Section IV(B) provides the relief the United States is seeking 
against defendant ATP.
    As required by the Antitrust Procedures and Penalties Act, on March 
25, 1994, American, Alaska, Delta, and ATP filed with this Court a 
description of written and oral communications on their behalf within 
the reporting requirements of section 15(g) of the APPA. Continental, 
Northwest and Trans World filed their notifications of written and oral 
communications with the Court on March 28, 1994. A summary of the terms 
of the proposed Final Judgment and CIS, and directions for the 
submission of written comments relating to the proposed decree were 
published in the Washington Post for seven days over a period beginning 
March 27, 1994. The proposed Final Judgment and CIS were published in 
the Federal Register on March 31, 1994. 59 FR 15225.
    The 60-day period for public comments commenced on April 1, 1994 
and expired on May 30, 1994. The United States received only one 
comment on the proposed Final Judgment, a letter from Michael London. 
As required by 15 U.S.C. 16(b), this comment is being filed with this 
response. (Exhibit A).
    In his comments, Mr. London expressed concern that the proposed 
Final Judgment's prohibition on advance price announcements would 
deprive consumers of valuable information for making travel plans. Mr. 
London also expressed concern that the United States may have filed its 
lawsuit without sufficient evidence to substantiate its claims against 
the airlines. The United States sent Mr. London a letter individually 
responding to his inquiries regarding the proposed Final Judgment. The 
United State's correspondence with Mr. London is also being filed with 
this response. (Exhibit B).
    The Department has carefully considered Mr. London's comments. 
Nothing in these comments has altered the United States' conclusion 
that the proposed Final Judgment is in the public interest.
    The proposed Final Judgment provides all of the relief requested in 
the Complaint against American, Alaska, Continental, Delta, Northwest, 
Trans World, the ATP, without the substantial expense of a trial. The 
relief provided by the proposed decree will leave these airlines and 
ATP without the ability to resume the actions that constituted the 
antitrust violations. Entry of the proposed Final Judgment is in the 
public interest.

    Respectfully submitted,

    Dated: June 17, 1994.
Mary Jean Moltenbrey,
Attorney, Antitrust Division.
Exhibit A--Civil Action No. 92-2854 (SSH)
April 5, 1994.
Assistant Attorney General, Anne K. Bingaman,
United States Department of Justice, Washington, D.C.

    Dear Ms. Bingaman: I am writing to you concerning an article 
that appeared in our local newspaper about a settlement of price 
fixing allegations.
    There are 2 points about this matter that concern me as both an 
air traveller and as a citizen.
    (1) I have found in the past, the prenotification of fare 
adjustments very useful in planning airline travel. My travel agent 
would scan the computer system for reduced fares to be effective at 
some future date. I could then plan travel for a date when that fare 
would be available.
    This would enable me to save money instead of paying a higher 
current fare. Therefore, instead of injuring the public, this 
practice could result in savings over existing fares.
    (2) The part that really concerns me and that seems unbelievable 
is the section of the article that states ``The government believes 
that history would make proving guilt beyond a reasonable doubt 
difficult''.
    If this paraphrase of your department's statement is correct, it 
seems a terrible thing that our government would take action under 
these circumstances. I always thought that there were Constitutional 
safeguards that protected individuals and companies against 
arbitrary prosecution. If the Justice Department had these doubts, 
how dare they waste our tax money and impinge the reputation of 
companies on such an unsubstantiated charge.
    I am a stockholder of one of the airline companies named as a 
party to the settlement. I believe that unfair and arbitrary actions 
of the Justice Department have injured the reputation of the company 
and therefore my investment. If I believe that the actions of the 
Justice Department constitute False Prosecution or the attempt at 
False Prosecution, what remedies are available to me?

      Very Truly yours,
Michael London.
June 7, 1994.
Michael London,
P.O. Box 2106, McAllen, Texas 78505-2106.

    Dear Mr. London: I am responding to your letter to Assistant 
Attorney General Anne Bingaman concerning the proposed consent 
decree between the Department of Justice, a number of major airlines 
and the Airline Tariff Publishing Company (``ATP''), a computerized 
fare exchange system. The proposed decree settles a civil antitrust 
suit in which the Department alleged that eight major airlines fixed 
prices and used the ATP system in a way that unnecessarily 
facilitated coordination of airline fares. You express concern that 
the proposed decree's prohibitions on prenotification of fare 
adjustments will deprive consumers of information regarding future 
fare discounts. You also express concern that the Department may 
have filed the lawsuit against the airlines without substantial 
evidence to support its allegations.
    In your letter, you state that pre-notification of fare changes 
enabled you to schedule travel for dates when fares would be 
reduced. The proposed decree will not prohibit the airlines from 
publishing different fares applicable for travel on different dates, 
provided the fares are currently available for sale. Thus, you will 
still be able to plan your travel for days of the week or months of 
the year when the airlines charge lower fares.
    The decree will prohibit the airlines from disseminating fares 
that can only be purchased at a later date. In the past, the 
airlines used such fares to negotiate and agree upon fare increases 
or the elimination of discounts. Because these fares changed 
frequently during negotiations, and often never became available for 
sale, they were extremely unreliable and therefore not useful for 
consumers planning when to purchase their tickets.
    You also suggest that the Department may have acted arbitrarily 
in its prosecution of the airlines because the government did not 
believe that it could prove guilt beyond a reasonable doubt. The 
Department filed this action because it had compelling evidence that 
the airlines used ATP to reach agreements to raise prices and 
eliminate discounts, in violation of the Sherman Act, raising prices 
in thousands of markets and for millions of travelers.
    The government's decision whether to prosecute any particular 
violation of the Sherman Act civilly or criminally is one that 
depends on a number of factors. In this case, the government's 
primary goal was to obtain injunctive relief that would prevent the 
airlines from continuing their anticompetitive practices. We also 
recognized that the airlines' collusive pricing practices evolved 
from a system that developed when the airlines were heavily 
regulated and not subject to the antitrust laws; indeed, at one time 
the airlines were required to file fare changes in advance to allow 
regulators time to review and disapprove them. That history would 
have made it considerably more difficult to prove beyond a 
reasonable doubt that the airlines intended to reach price fixing 
agreements. For these and other reasons, the Department elected to 
bring a civil case seeking injunctive rather than punitive relief 
against the airlines. In a civil case, the government need only 
prove that the defendants violated the Sherman Act by a 
preponderance of the evidence. The government is confident that it 
could easily have met that burden at trial.
    I hope that this letter responds to your concerns. Thank you for 
your interest in this matter and in the enforcement of the antitrust 
laws.

      Sincerely,
Roger W. Fones,
Chief, Transportation, Energy and Agriculture Section.

Certificate of Service

    I hereby certify that I have caused a copy of the foregoing United 
States' response to public comments to be served via first class mail 
upon the following counsel in this matter:

Mark Leddy, Michael J. Byrnes, Cleary, Gottlieb, Steen & Hamilton, 1752 
N Street, N.W., Washington, D.C. 20036
Jonathan B. Hill, Dow, Lohnes & Albertson, 1255 Twenty-third Street, 
N.W., Washington, D.C. 20037

    For defendant Airline Tariff Publishing Company

James V. Dick, Squire, Sanders & Dempsey, 1201 Pennsylvania Avenue, 
N.W., Washington, D.C. 20044

    For defendant Alaska Airlines, Inc.

Michael Doyle, Alston & Bird, One Atlantic Center, 1201 West Peachtree 
Street, Atlanta, GA 30309-3960
Irving Scher, Weil Gotshal & Manges, 767 Fifth Avenue, New York, N.Y. 
10153
Peter D. Isakoff, Weil, Gotshal & Manges, 1615 L Street, N.W., Suite 
700, Washington, D.C. 20036

    For defendant American Airlines, Inc.

Donald L. Flexner, Crowell & Moring, 1001 Pennsylvania Avenue, N.W., 
Washington, D.C. 20004-2595

    For defendants Continental Airlines, Inc., and Northwest Airlines, 
Inc.

James R. Weiss, Preston Gates Ellis & Rouvelas Meeds, 1735 New York 
Ave., N.W. Suite 500, Washington, D.C. 20006
Emmet J. Bondurant II, Bondurant, Mixson & Elmore, 1201 West Peachtree 
Street, N.W., 39th Floor, Atlanta, Georgia 30309

    For defendant Delta Air Lines, Inc.

James E. Anklam, Jones, Day, Reavis & Pogue, 1450 G Street, NW., 
Washington, D.C. 20005-3939
Thomas Demitrack, Jones, Day, Reavis & Pogue, North Point, 901 Lakeside 
Avenue, Cleveland, Ohio 44114

    For defendant Trans World Airlines, Inc.

    Dated: June 17, 1994.
Mary Jean Moltenbrey,
Antitrust Division, U.S. Department of Justice.
[FR Doc. 94-15910 Filed 6-29-94; 8:45 am]
BILLING CODE 4410-01-M