The American Way

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Hendricks Dewayne <dewayne () warpspeed com>
> Date: October 13, 2016 at 10:24:58 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] The American Way
> Reply-To: dewayne-net () warpspeed com
>
> [Note:  This item comes from friend David Rosenthal.  DLH]
>
> The American Way
> President Obama promised to fight corporate concentration. Eight years later, the airline industry is dominated by 
> just four companies. And you’re paying for it.
> By Justin Elliott, ProPublica
> Oct 11 2016
> <https://www.propublica.org/article/airline-consolidation-democratic-lobbying-antitrust>
>
> Three years ago, the Obama administration unleashed its might on behalf of beleaguered American air travelers, filing 
> suit to block a mega-merger between American Airlines and US Airways. The Justice Department laid out a case that 
> went well beyond one merger.
>
> “Increasing consolidation among large airlines has hurt passengers,” the lawsuit said. “The major airlines have 
> copied each other in raising fares, imposing new fees on travelers, reducing or eliminating service on a number of 
> city pairs, and downgrading amenities.”
>
> The Obama administration itself had helped create that reality by approving two previous mergers in the industry, 
> which had seen nine major players shrink to five in a decade. In the lawsuit, the government was effectively 
> admitting it had been wrong. It was now making a stand.
>
> Then a mere three months later, the government stunned observers by backing down.
>
> It announced a settlement that allowed American and US Airways to form the world’s largest airline in exchange for 
> modest concessions that fell far short of addressing the concerns outlined in the lawsuit.
>
> The Justice Department’s abrupt reversal came after the airlines tapped former Obama administration officials and 
> other well-connected Democrats to launch an intense lobbying campaign, the full extent of which has never been 
> reported.
>
> They used their pull in the administration, including at the White House, and with a high-level friend at the Justice 
> Department, going over the heads of staff prosecutors. And just days after the suit was announced, the airlines 
> turned to Chicago Mayor Rahm Emanuel, Obama’s first White House chief of staff, to help push back against the Justice 
> Department.
>
> Some lawyers and officials who worked on the American-US Airways case now say they were “appalled” by the decision to 
> settle, as one put it.
>
> “It was a gross miscarriage of justice that that case was dropped and an outrage and an example of how our system 
> should not work,” said Tom Horne, the former state attorney general of Arizona, one of seven states that were 
> co-plaintiffs with the federal government.
>
> As a candidate in 2007, President Obama pledged to “reinvigorate antitrust enforcement,” calling that the “American 
> way to make capitalism work for consumers.” Hillary Clinton has recently made similar promises.
>
> But the reversal in the American-US Airways case was part of what antitrust observers see as a string of 
> disappointing decisions by the Obama administration.
>
> “I hoped they would be much more aggressive and much more concerned about increasing concentration and ongoing 
> predatory conduct,” said Thomas Horton, a former Justice Department antitrust attorney now at University of South 
> Dakota law school. “Too often they really took the business side.”
>
> Obama’s antitrust enforcers have been somewhat more aggressive than the Bush administration in challenging mergers. 
> But that has come in the face of a record-breaking wave of often audacious deals. Nor has the Obama administration 
> brought any major cases challenging companies that abuse their monopoly power. It approved three major airline 
> mergers, for example, leaving four companies in control of more than 80 percent of the market.
>
> In the American-US Airways case, Emanuel emerged as one of the deal’s biggest champions. He was in regular contact 
> with the CEOs and lobbyists for both airlines.
>
> “The combination of American Airlines and US Airways creates a better network than either carrier could build on its 
> own,” Emanuel wrote in an October 2013 letterto the Justice Department that other mayors signed onto. “American’s 
> substantial operations throughout the central United States provide critical coverage where US Airways is 
> underdeveloped.”
>
> The letter was an uncanny echo of the airlines’ arguments – for good reason: It was actually written by an American 
> Airlines lobbyist, emails obtained by ProPublica show.
>
> The day after sending the missive, as government lawyers were racing to prepare for trial, Emanuel lunched with the 
> CEOs of American and US Airways at a suite in the St. Regis hotel in Washington. The next stop on his schedule: the 
> White House, for meetings with President Obama and Chief of Staff Denis McDonough. Later that day, Emanuel met with 
> Secretary of Transportation Anthony Foxx, whose agency also had a hand in reviewing the merger. (The White House and 
> Department of Transportation declined to comment on the meetings.)
>
> [snip]
>
> Dewayne-Net RSS Feed: <http://dewaynenet.wordpress.com/feed/>



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