Oberstar disappointed by DOJ decision

In the wake of that decision, Rep. James L. Oberstar (Minn.), Chairman of the Committee on Transportation and Infrastructure, released the following statement:

The Justice Department's antitrust decision is regrettable, and, while I am disappointed with the ruling, I understand that the Department believed it had little choice.

The Justice Department concluded that it had to base its decision on a very narrow set of criteria to determine whether the merger would violate existing federal antitrust laws. The Department's examination of the merger proposal turned up problems with market domination on routes between United's existing hubs and Continental's hub at Newark. However, when Continental announced a deal to transfer slots and other assets at Newark to Southwest Airlines, the potential antitrust violation was removed and Justice believed that it had no grounds on which to object to the merger.

This action points strongly to the need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole. There must be consideration of whether a merger will inevitably trigger

others, ultimately reducing the industry to a few large carriers, each of which is unwilling to compete seriously in markets dominated by one of the others.

When Congress deregulated the airlines in 1978, we were promised better service, added competition, and more choices for consumers. With the United-Continental merger, our domestic carrier fleet will have shrunk to four network carriers. Moreover, each merger appears to trigger another, as carriers feel the need to get bigger in order to compete with the newly merged airlines. American merged with TWA, then America West merged with US Airways, followed by Delta absorbing Northwest, and now United merging with Continental. Can a US Airways-American Airlines merger be far behind?

This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978. Nor did anyone foresee three international alliances dominating the global airline market.

Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

I believe it may be time for Congress to rethink its vote in 1978.