Merger of American Airlines and US Airways After Bankruptcy May Face Anti-Trust Law Issues
Provided by HG.org
A bankruptcy judge in New York has endorsed a plan to merge American Airlines and US Airways. That approval, however, is contingent upon the outcome of an anti-trust lawsuit filed by the US Department of Justice which asserts that such a merger would deprive the marketplace of choice and competition.
AMR Corp., the parent company of American Airlines, filed for bankruptcy in November 2011. As part of the bankruptcy, AMR Corp. would obtain funds to pay off creditors by selling off assets including the airline.
But, the merger that would create the nation's largest air carrier. As such, it has drawn the attention of the US Department of Justice, which filed a lawsuit in August 2013 claiming the merger would cut competition. Lack of competition could lead to price fixing and unfair competition in the short term, or to fewer choices and higher fares.
US anti-trust laws are a combination of federal and state government laws, which regulate the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The federal foundation of anti-trust laws flow from the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. These laws restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. They also restrict the mergers and acquisitions of organizations which could substantially lessen competition and prohibit the creation of monopolies. The Federal Trade Commission, the US Department of Justice, state governments, or affected private parties may all bring legal actions to enforce the anti-trust laws.
The trial for the Justice Department's anti-trust lawsuit is scheduled to begin November 25, 2013. If the lawsuit succeeds in blocking the merger, AMR must return to bankruptcy court to get approval of a new plan to pay off creditors.
This case demonstrates the often overlapping and complicated issues facing large corporations undergoing mergers, bankruptcy, or other legal troubles. While some of these issues may be unique to larger companies, any business entity could face complicated legal matters similar to these. That is why it is critical for any corporation to have the assistance of competent, skilled counsel to assist it with any legal obstacles it may face.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
But, the merger that would create the nation's largest air carrier. As such, it has drawn the attention of the US Department of Justice, which filed a lawsuit in August 2013 claiming the merger would cut competition. Lack of competition could lead to price fixing and unfair competition in the short term, or to fewer choices and higher fares.
US anti-trust laws are a combination of federal and state government laws, which regulate the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The federal foundation of anti-trust laws flow from the Sherman Act, the Clayton Act, and the Federal Trade Commission Act. These laws restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. They also restrict the mergers and acquisitions of organizations which could substantially lessen competition and prohibit the creation of monopolies. The Federal Trade Commission, the US Department of Justice, state governments, or affected private parties may all bring legal actions to enforce the anti-trust laws.
The trial for the Justice Department's anti-trust lawsuit is scheduled to begin November 25, 2013. If the lawsuit succeeds in blocking the merger, AMR must return to bankruptcy court to get approval of a new plan to pay off creditors.
This case demonstrates the often overlapping and complicated issues facing large corporations undergoing mergers, bankruptcy, or other legal troubles. While some of these issues may be unique to larger companies, any business entity could face complicated legal matters similar to these. That is why it is critical for any corporation to have the assistance of competent, skilled counsel to assist it with any legal obstacles it may face.
Copyright HG.org - Google+
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
