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Merger between US Airways and American Airlines blocked

While a majority of our readers here in Texas may have heard about the Justice Department’s move to stop the merger between US Airways and American Airlines, some of our readers may not be entirely sure why this move was made. According to the Justice Department, the merger would break antitrust laws, but what does this mean for our readers?

In order for any business merger to be approved, companies need to prove that this will not have a significant impact on consumers. Meaning, the consolidation from two companies down to one will not significantly raise prices or create a monopoly in the market. Many of our readers may remember this being an issue when the department blocked the merger of AT&T and T-Mobile in 2011, or when it requested that Anheuser-Busch InBev alter the terms of its takeover of Corona this year.

But despite having approved multiple mergers of airlines in the past, the Justice Department says that it cannot allow this merger to go through because it would have a significant impact on the market, limiting airline carriers and effectively driving up costs for the consumers. It’s a point US Airways and American Airlines adamantly denies, pointing to the fact that the recent airline mergers actually stabilized the industry and brought more profitability.

In defiance of the civil antitrust lawsuit that was recently filed against the two airlines by the Justice Department, American Airlines and US Airways have said that they will take this matter to court and will fight their case if necessary.

Source: The New York Times, "U.S., Filing Suit, Moves to Block Airline Merger," Jad Mouawad, Aug. 13, 2013

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