U.S. to Appeal AMR Suit Dismissal
The U.S. government will appeal a judge’s dismissal of a landmark suit charging AMR Corp.’s American Airlines with using predatory tactics to drive low-cost carriers from its hub at Dallas/Fort Worth International Airport, the Justice Department said Tuesday.
The case has been closely watched because it could settle some long-disputed questions about what constitutes fair competition in the airline industry.
The government filed notice of the pending appeal with the U.S. District Court in Wichita, Kan.
The case, brought under the Clinton administration, had charged American with slashing fares and flooding routes with seats to oust low-cost carriers from its main hub at Dallas/Fort Worth.
But Judge J. Thomas Marten threw out the government’s predatory pricing suit against AMR in April, saying the airline simply engaged in traditional competition.
A spokeswoman for the department said the division’s newly installed antitrust chief, Charles A. James, will recuse himself from the case, as will U.S. Solicitor General Theodore B. Olson, because both men or their firms have worked for AMR in the past.
“It was an appealable case, and it’s good that the appeals court will have the opportunity to decide what the law is in this area,” said Jonathon Baker, a professor at American University’s Washington College of Law who has studied airline competition issues.
Some antitrust attorneys in Washington expressed surprise at the decision to appeal. They said there was a strong chance that the new, more conservative regime at the Justice Department would drop the case.
AMR issued a statement saying that Judge Marten had “overwhelmingly concluded that the Justice Department’s legal arguments and strategy were flawed.
“We believe that the [appeals court] will come to the same conclusion and uphold the summary judgment ruling,” the company said.
In its lawsuit, the Justice Department argued that there was no rationale for American’s aggressive tactics in Dallas except to drive competitors out of business.
The company cut fares and “flooded” some of the routes out of Dallas with an excessive number of airline seats, the government charged.
AMR’s attorneys countered that the company’s tactics were nothing more than aggressive competition. Even though it cut fares and added flights out of Dallas, they argued, the company never sold its tickets below cost, something courts have held is a key indicator of predatory pricing.
Marten came down on AMR’s side in April, about a month before the case was scheduled to go to trial.
“There is no doubt that American may be a difficult, vigorous, even brutal competitor,” the judge said. “But here, it engaged only in bare, but not brass, knuckle competition. Summary judgment is appropriate.”
