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Texas Attorney General Greg Abbott is no fan of Big Government. As he proudly declares, “My history of taking on the Department of Justice is well documented. I have sued the Obama administration about 28 times and have repeatedly battled against overreaching actions by the federal government.”
Yet he was one of six state attorney generals who joined the Department of Justice in a lawsuit filed on Tuesday to block the proposed merger between American, which is headquartered in his home state, and US Airways.
Likely anticipating questions and consternation about his out-of-character move, Abbott laid out his case against the merger in the Opinion section of the Dallas Morning News.
So, why does he object to the merger?
The answer is simple: We believe that actions by the airlines and their officials violate antitrust laws. In fact, the legal violations appear so overt that it would offend my oath of office not to take action.
In particular, Abbott considers the merger to be anti-competitive, not pro-competitive as the airlines themselves would have it. “What the proposed merger seeks is not competition in the free market, but it expressly seeks the elimination of competition so the airlines no longer need to compete for customers. It turns the free market on its head.” He continues:
When you have fewer competitors — in this case, just three legacy airlines — it’s much easier for them to play follow-the-leader. One takes the bag fee up, and the others go along. If you reduce the number of airlines, you make it easier for the remaining players to participate in tacit coordination rather than real competition. For airlines, the free market is morphing into an oligopolistic market. Competition is giving way to price and market control by a limited number of players who appear intent to agree on price increases rather than competing for customers. That is what typically happens when competition is removed from the marketplace.
Finally, Abbott points out that American is doing just fine without partnering with US Airways, having just reported record quarterly revenue and a $357 million profit.
There’s nothing new or novel about Abbott’s thinking on this issue. His points have all been made before, by consumer advocates and by the Justice Department, among others. What makes his comments noteworthy is that they’re coming from a self-styled pro-business advocate, who might reasonably have been expected to come down on the side of his home-state airline.
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