NEW YORK ( TheStreet) -- Officials at US Airways (LCC) and American Airlines parent AMR Corp. (AAMRQ) say they are eager to take on the Department of Justice after the antitrust agency announced Aug. 13 it would try to block the carriers' planned $11 billion merger. The outcome of the case will likely depend on how Judge Colleen Kollar-Kotelly of the U.S. District Court in Washington views the airlines' claim that the stronger route network and improved financial health the merger would give them will translate into benefits for consumers.
A big problem for the airlines is that the federal government's merger guidelines have a high bar for proving that those kinds of efficiencies will outweigh the harm of lost competition. The DOJ's Antitrust Division and the Federal Trade Commission have historically been wary of efficiency claims and a 2010 revision of the agencies' horizontal merger guidelines increased the level of proof that merging parties must demonstrate to show that benefits of merger will offset any damage to consumers.
"There is a heavy burden for showing the agencies that efficiency claims can overcome competitive effects and I've never known a case to come out well for merging parties when it comes to efficiency claims," said one antitrust practitioner.
"The government is usually skeptical
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV