[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