Southwest Flips on Big 3 Airlines in Price Fixing Case

Two and a half years ago the Department of Justice announced that they were investigating the US airlines for unlawful collusion to limit capacity and increase airfares.

It struck me as bizarre to investigate airlines for collusion over pricing while prices were falling. And odder still for the government to sign off on mergers and anti-trust immunized joint ventures and find themselves ‘shocked’ that there’s less competition.

However the Obama administration’s Department of Justice — which we’d expect to be more aggressive investigating business anti-trust — closed their case finding no evidence of collusion.

When the government goes looking for anti-trust violations and can’t find any that’s a pretty strong statement because there’s almost no such thing as not violating anti-trust rules. If your prices are high, you have market power. If your prices are low, that’s predatory pricing. And if your prices are the same as competitors, that’s collusion.

Still the DOJ walking away from its case didn’t end matters. There’s still a private lawsuit. And Southwest has settled “for $15 million and a promise to help the plaintiffs make their case against the three remaining defendants” Delta, American and United.

Southwest will have to turn over “a full account of facts then known to Southwest that are relevant to the claims asserted in the action” and while Bloomberg frames this as ‘flipping’ on their cartel it may ultimately wind up being exonerating facts.

The airline will also have to “connect the plaintiffs with an industry expert on the domestic airlines industry, help pay for the expert’s time, and work with the plaintiffs on deposing employees and officers in the dispute against the remaining airlines.”

This settlement in the case In re Domestic Airline travel Antitrust Litigation which consolidates 23 separate class actions must be approved by Judge Colleen Kollar-Kotelly of the US District Court for the District of Columbia.

(HT: Retired Lawyer)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Yikes, was reading this earlier in a web browser and got some ransomware click me now pop ups! Does boardingarea have threat scans running against the ads it shows?

  2. It seems to me it’s not likely LUV will be providing “exonerating facts” if it agreed to pay $15 million to be dropped from the suit. If they had exonerating facts, one would think they’d use it to avoid paying.

  3. Unless somebody can establish that posting your prices on the internet that others match is illegal “collision” under Federal law, something tells me that this lawsuit remains completely frivolous — regardless of whether WN wants to settle to avoid litigation costs.

  4. ” the Obama administration’s Department of Justice — which we’d expect to be more aggressive investigating business anti-trust”

    Why? Both Democrats and Republicans are captured by the producers they regulate. And who is more supportive of labor unions (monopolies)?

  5. Well Jerry, it’s completey reasonable. $15M still gets the govt to extract some blood which almost certainly means that got WN on their own collusion. Now, instead of it being a $100M case WN flipped on some bigger (potential) fish. This is actually really common in white collar investigations. WM settlement agreement may even be largely confidential. $15M probably equals the total cost of the entire investigation to date because every branch has a limited budget so they’ve gotta replenish the reserves where they can.

  6. To all those getting ransomware, I suggest using the SOPHOS free home software protection. They are top notch industry leaders in
    computer protection. Dump Norton and the like. SOPHOS is the best, and it is 100% FREE.

  7. @Chris: Thanks! I got that. Used Task Manager to kill chrome. Restarted chrome with just a google homepage. Went to settings and clear all saved data (cookies, etc.). Removed extensions I did not recognize. That stopped it.

    SOPHOS next time.

    Clever of Gary to add these fees. We must be on a ‘Basic Economy’ web site.

  8. No evidence of malicious popups here. I don’t know if that’s good or bad.

    I use a popup blocker in Firefox.

  9. So, Trump is correct. There’s no collusion because he’s certainly not like anyone else.

    (I didn’t check but had to interject Trump into this post in case nobody had done so yet)

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