A merger of American Airlines and US Airways would violate U.S. antitrust law, the Justice Department, six state attorneys general and the District of Columbia allege in a lawsuit filed in Washington on Tuesday.
Bloomberg reports that Justice alleges the merger would lead to “less competition in the industry and higher prices for consumers.” The wire service explains:
“The Justice Department sued to block the transaction because it would remove the incentive for US Airways to offer lower prices and lead to higher airfares for consumers, said a person familiar with the matter who asked not to be identified because the matter is private.
“The suit, unexpected by analysts and industry executives, marks a sharp break with the department’s past policy, which allowed six unprofitable airlines to merge over the past five years in an effort to cut costs and end losses. For American parent AMR Corp., which filed for bankruptcy protection in November 2011, the merger would have completed its reorganization and allowed it to exit court protection.”
As NPR’s Marilyn Geewax has reported the proposed merger would create the country’s largest airline and company worth about $11 billion.
The merger had been long rumored and was finally approved by both boards back in February.
“Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure,” Attorney General Eric Holder said in a statement. “By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”