So what happened here? While the DOJ predictably says otherwise, it is hard to escape the conclusion that extralegal considerations had some influence on the DOJís willingness to pull the plug on the case. Whatever the case, the defendants appear to be the big winners here. As their statements regarding the settlement made crystal clear, the conditions being placed on the merger proceeding will not materially impact their ability to realize what they set out to do through this transaction. Wall Street apparently agrees with that conclusion. And, while the Obama administration will hail this settlement as a sign of its vigorous enforcement of the nationís antitrust laws, the credibility of that claim ultimately will be determined by the mergerís impact on consumers. If, as many fear, the overall result will be higher prices, inferior service and a missed opportunity to reverse the airline industryís descent into oligopoly, this settlement will be looked back on as another sad day for antitrust enforcement in this country.
So what, if anything, can Congress do about this? The answer, for airline customers who will be paying higher prices because of this settlement, is nothing. But Congress can do something to make such settlements harder to consummate going forward. Under the Tunney Act, the American Airline/US Airways settlement will be scrutinized by a federal judge, who will determine whether the settlement is in the public interest. Even though Congress amended the Tunney Act in 2004 to grant courts a more active role in reviewing antitrust consent decrees such as this one, courts are still disinclined to act as a vigorous check against weak antitrust enforcement. Unsurprisingly, most commentators anticipate this settlement to sail through the Tunney Act procedure. If Congress wants to do something positive in the aftermath of this settlement, it can make the Tunney Act process more rigorous. Then, at least something good may come out of this debacle.
Jeffrey I. Shinder is the managing partner of Constantine Cannonís New York City office; Jean Kim is a partner there. Constantine Cannon is an antitrust firm with offices in New York City, Washington, D.C., and London.