I.
Summary
of
Comments
.........................................................................................................
1
II.
Background
..........................................................................................................................
.3
A.
The
Star
Alliance
and
its
immunized
components
..............................................
.3
B.
Continental
’
s
request
to
join
Star
and
receive
antitrust
immunity
.....................
.
5
C.
The
Show
Cause
Order
..........................................................................................
.8
III.
The
Statutory
Scheme
Disfavors
Immunity
and
Places
a
Significant
Burden
on
the
Applicants
to
Justify
Their
Request
....................................................................................
10
A.
Antitrust
enforcement
plays
a
central
role
in
the
deregulated
airline
industry
..
11
B.
Applicants
must
show
that
immunity
is
required
by
the
public
interest
.............
12
IV.
DOT
Should
Deny
the
Broad
Application
for
Immunity
................................................
13
V.
Immunizing
an
Alliance
that
Includes
Continental
and
the
Other
Star
ATI
Members
Risks
Significant
Competitive
Harm
in
Certain
Markets
................................................
16
A.
Analyzing
the
competitive
effects
of
the
Joint
Application
agreements
.............
16
B.
Competition
on
non-transatlantic
routes
...............................................................
18
C.
Competition
on
transatlantic
routes
.......................................................................
20
1
.
Nonstop
service
is
a
separate
product
market
..........................................
21
2.
Nonstop
overlap
on
specific
transatlantic
routes
......................................
23
3.
The
loss
of
a
nonstop
competitor
is
likely
to
result
in
significant
fare
increases
.......................................................................................................
24
4.
Nonstop
entry
is
unlikely
............................................................................
25
D.
Competition
on
transborder
routes
.......................................................................
26
E.
Competition
on
domestic
routes
...........................................................................
28
VI.
The
Applicants
Make
No
Showing
Why
Immunity
Is
Required
to
Achieve
the
Claimed
Public
Benefits
Arising
from
the
Joint
Application
Agreements
....................................
29
A.
The
Applicants
’
assertion
that
they
will
not
move
forward
without
immunity
is
not
convincing
.........................................................................................................
31
B.
The
Applicants
exaggerate
their
claim
that
“
significant
litigation
risks
”
exist
absent
immunity
.......................................................................................................
33
C.
The
Applicants
inflate
the
importance
of
inter-alliance
competition
.................
34
D.
Immunity
will
not
advance
open
skies
.................................................................
35
E.
The
Applicants
overemphasize
the
likelihood
that
immunity
for
the
proposed
alliance
will
substantially
reduce
double
marginalization
....................................
35
VII.
Any
Grant
of
Antitrust
Immunity
Should
Include
Restrictions
to
Limit
Potential
Anticompetitive
Effects
.......................................................................................................
37
A.
Carve
out
nonstop
overlap
routes
.........................................................................
37
B.
Deny
global
immunity
............................................................................................
41
VIII.
Conclusion
............................................................................................................................
43