Court Relies on Testimony of Three Compass Lexecon Experts
On January 29, 2021, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York ruled in favor of AMR Corporation et al. in a case related to the AMR/US Airways merger. Private parties brought suit in August 2013 alleging that the then-proposed merger between AMR Corporation—the owner of American Airlines—and US Airways Group violated Section 7 of the Clayton Antitrust Act because its “effect . . . may be substantially to lessen competition, or to tend to create a monopoly in the transportation of airline passengers in the United States.” Shortly after the suit was filed, the U.S. Department of Justice (“DOJ”) and several states filed a complaint against AMR and US Airways seeking to enjoin the merger. In December 2013, AMR and US Airways reached agreement on a settlement in the DOJ action, and the merger was completed in 2014. The private action continued.
A trial was held in March 2019. Defendants presented written expert testimony from three Compass Lexecon experts—Professor Dennis Carlton, Daniel Kasper and Professor Janusz Ordover—each of whom testified at trial. Judge Lane ruled for defendants on all issues, citing the testimony of all three Compass Lexecon experts, and concluded that plaintiffs failed to show that the merger lessened competition. Judge Lane further concluded, based on the evidence presented by Professor Carlton, that the merger was procompetitive, writing that “Dr. Carlton’s three econometric analyses and his related testimony credibly demonstrate that the Merger has expanded airline output, and that it has resulted in a reduction of average fares, an increase in the number of total passengers, and an increase in the number of seats available.” Judge Lane also cited a published study authored by several Compass Lexecon economists, which showed that the series of mergers of “legacy” carriers creating the current American, Delta and United Airlines have been pro-competitive, both separately and collectively. (See Dennis Carlton, Mark Israel, Ian MacSwain & Eugene Orlov, “Are Legacy Airline Mergers Pro- or Anti-Competitive? Evidence from Recent U.S. Airline Mergers,” 62 International Journal of Industrial Organization. (2019)).
Compass Lexecon was retained by Daniel M. Wall and Sadik Huseny of Latham & Watkins LLP, and also worked with American Airlines’ inside counsel, including Stephen Johnson and Bruce Wark. Professor Carlton was supported by a Compass Lexecon team that included Gustavo Bamberger, Lynette Neumann and Eugene Orlov; Mr. Kasper was supported by a Compass Lexecon team that included Darin Lee, Eric Amel and Ethan Singer; and Professor Ordover was supported by a Compass Lexecon team that included Yair Eilat and Eric Amel.