U.S. Raises Competition Fears in Eastern Takeover

The Transportation Department, saying Texas Air Corp.’s acquisition of Eastern Airlines “presents serious competitive issues,” ordered an in-depth analysis of the merger Wednesday, including oral arguments before an administrative law judge.

Texas Air had hoped that the department would give the proposed merger accelerated treatment so it might be concluded before the heavy summer air travel season. But critics have asked for the longer process because they said the merger poses competitive problems.

The Transportation Department, which must approve the merger, said oral arguments would begin May 27, with a recommendation to be sent by the administrative law judge to Transportation Secretary Elizabeth Hanford Dole by July 23.

Texas Air and Eastern announced the merger agreement last February. If the deal is approved, it would result in the creation of the country’s largest airline. Texas Air already owns Continental Airlines and New York Air.

The department said it would examine all competitive issues raised by the merger but asked participants to concentrate on the merger’s impact on competition in the Northeast market.

Critics of the merger, including a number of airlines, said Eastern’s primary competitor in the Washington-New York-Boston air shuttle is now New York Air. Under the merger, Texas Air would control both of those airlines.