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Preliminary Injunction Denied in Private Suit to Block Airline Merger

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

After the merger of UAL Corporation, parent of United Airlines, and Continental Airlines, Inc, received regulatory approvals from the Department of Justice, the Department of Transportation, and the European Commission, the federal district court in San Francisco rejected a request for a preliminary injunction blocking the merger in a private suit.

Forty-nine named plaintiffs who had purchased commercial air travel for personal use, and intended to purchase tickets in the future, sought the temporary relief pending trial on the merits.

A private plaintiff may obtain injunctive relief upon a showing of threatened loss or damage, and only when the antitrust injuries are personal. To advance the requisite showing of an antitrust violation?and thereby warrant injunctive relief?both the existence of a relevant market and the pending acquisition?s likelihood of causing anticompetitive effects had to be established.

Relevant Market

The plaintiffs failed to define a valid relevant market for purposes of evaluating the competitive effects of the transaction. The court rejected the three proposed alternative relevant markets:

(1) A market for business passengers served by ?network carriers,? characterized as airlines operating on a ?hub-and-spoke? business model;

(2) A market of 13 ?airport-pairs,? as opposed to ?city-pairs?; and

(3) A market consisting of the United States airline industry as a whole.

?Despite a vigorous and forceful attempt, plaintiffs have not carried their burden, under any injunctive relief merits standard, of demonstrating the existence of a viable relevant geographic and product market,? the court said.

Although the plaintiffs had established standing as consumers of airline tickets, they failed to establish any significant harm they would personally suffer that would warrant preliminary injunctive relief. The plaintiffs failed to demonstrate any irreparable harm as a result of the merger or that the balance of equities tipped at all, let alone sharply in their favor.

The plaintiffs did not demonstrate in any way that they themselves would suffer any specific harm were preliminary injunctive relief denied. Because the plaintiffs failed to satisfy their burden on the merits and failed to prove irreparable harm, the court denied the motion for a preliminary injunction.

The decision is Malaney v. UAL Corporation, 2010-2 Trade Cases ¶77,187.

Full post as published by Trade Regulation Talk on October 13, 2010 (boomark / email).