US v. Airline Tariff Pub. Co.

• Decision Date: 01 November 1993
• Docket Number: Civ. A. No. 92-2854 SSH.
• Citation: 836 F. Supp. 9
• Parties: UNITED STATES of America, Plaintiff, v. AIRLINE TARIFF PUBLISHING COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Columbia

836 F. Supp. 9

UNITED STATES of America, Plaintiff, v. AIRLINE TARIFF PUBLISHING COMPANY, et al., Defendants.

Civ. A. No. 92-2854 SSH.

United States District Court, District of Columbia.

November 1, 1993.

Mary Jean Moltenbrey, Antitrust Div., Dept. of Justice, Washington, DC, for plaintiff.

Mark Leddy, Michael J. Byrnes, Cleary, Gottlieb, Steen & Hamilton and Jonathan B. Hill and Rachel I. Wollitzer, pro hac vice, Dow, Lohnes & Albertson, Washington, DC, for Airline Tariff Pub.

James V. Dick and Marshall Sinick, Squires, Sanders & Dempsey, Washington, DC, for Alaska Airlines.

Peter D. Isakoff, Douglas Bertrand Snyder, Weil, Gotshal & Manges, Washington, DC and Michael P. Kenny, pro hac vice, Alston & Bird, Atlanta, GA, for American Airlines.

Donald L. Flexner and Peter Bushfield Work, Crowell & Moring, Washington, DC, for Continental/Northwest.

John Louis Longstreth and James R. Weiss, Preston Gates Ellis & Rouvelas Meeds, Washington, DC, for Delta.

James Edward Anklam, Jones, Day, Reavis & Pogue, Washington, DC, and Robert H. Rawson, Jr. (pro hac vice) and Thomas Demitrack (pro hac vice), Jones, Day, Reavis & Pogue, Cleveland, OH, for TWA.

Debra A. Valentine, O'Melveny & Meyers, Washington, DC and Henry R. Thurmann (pro hac vice), O'Melveny & Meyers, Los Angeles, CA, for United.

Charles R. Rule and Thomas Overton Barnett, Covington & Burling, Washington, DC, for USAir.

Burton J. Rubin (pro hac vice), American Soc. of Travel Agents, Inc., Alexandria, VA, for amicus curiae.

OPINION

STANLEY S. HARRIS, District Judge.

This matter is before the Court for a determination of whether a proposed final judgment is in the "public interest," and thus should be entered by the Court as a final judgment with respect to two of the defendants. After a thorough review of all of the materials submitted for the Court's consideration, the Court finds that the proposed final judgment is in the "public interest" as contemplated by the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16(b)-(h) (the "Tunney Act").

Background

On December 21, 1992, the government filed a complaint, which randomly was assigned to the late Judge Revercomb, charging eight major domestic airlines and the Airline Tariff Publishing Company ("ATP") with violations of Section One of the Sherman Act, 15 U.S.C. § 1.¹ Count One of the complaint charges defendants with agreeing to fix prices by increasing fares, eliminating discounted fares, and setting fare restrictions. This count alleges that defendants reached these agreements through the use of defendant ATP's fare dissemination services; the government contends that defendants used these services to exchange proposals, negotiate fare changes, and trade fare increases in one or more markets for fare increases in other markets. Count Two of the complaint alleges that defendants agreed to create, maintain, operate, and participate in the ATP dissemination system in a manner that unnecessarily facilitates the ability of the airline defendants and their co-conspirators to coordinate changes to their fares. The government contends that as a result of these agreements, consumers have paid higher prices for airline tickets. The complaint seeks an injunction barring defendants from entering into agreements with one another with respect to fares, and from disseminating information concerning proposed changes to fares that enables defendants to increase prices collusively and illegally.

In conjunction with the filing of the complaint, the government filed a proposed final judgment, a competitive impact statement, and a stipulation signed by two of the defendants, United Air Lines, Inc. ("United") and USAir, Inc. ("USAir") (the "settling defendants"), for entry of the proposed final judgment. Under the Tunney Act, the Court may not enter the proposed final judgment until the government has complied with certain procedures. Accordingly, on December 29 and 30, 1992, respectively, United and USAir filed with this Court a description of written and oral communications made on their behalf with the government in relation to the proposed final judgment. See 15 U.S.C. § 16(g). Beginning on January 3, 1993, and continuing for seven days over a period of two weeks, a summary of the terms of the proposed final judgment, the competitive impact statement, and directions for the submission of written comments relating to the proposal were published in The Washington Post. See 15 U.S.C. § 16(c). The proposed final judgment and competitive impact statement were published in the Federal Register on January 12, 1993. See 15 U.S.C. § 16(b). The 60-day period for public comments commenced on January 13, 1993, and expired on March 15, 1993. On April 8, 1993, the government submitted its response to the public comments. See 15 U.S.C. § 16(d). Thus, the Court finds that the government has complied with all of the procedural requirements of the Tunney Act.

Over 700 comments were submitted, the overwhelming majority of which oppose the entry of the proposed final judgment. Judge Revercomb undertook an exhaustive review of both the submissions and the parties' responses thereto. On May 24, 1993, Judge Revercomb ordered the parties, and the American Society of Travel Agents ("ASTA"), who is participating as an amicus curiae, to submit written responses to a series of questions designed to clarify several of the Court's remaining concerns. The parties submitted their responses to the Court's Order on June 28, 1993, and their replies on July 12, 1993.

On July 12, 1993, the case was transferred to the undersigned. (Judge Revercomb died on August 1, 1993.) Upon review of the voluminous record, the Court finds that it possesses sufficient information to make the public interest determination required by the Tunney Act. See 15 U.S.C. § 16(e)-(f).²

The Public Interest

The Tunney Act serves two main purposes. First, through its procedural requirements, it grants the public the opportunity to scrutinize and comment upon proposed decrees and thereby eliminates excessive secrecy from the process. Second, it ensures that the economic power and political influence of antitrust violators do not unduly influence the government into entering into consent decrees that do not effectively remedy antitrust violations. United States v. American Tel. and Tel. Co., 552 F.Supp. 131, 148 (D.D.C.1982), aff'd sub nom., Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983).

To implement this second purpose, the Act requires that before a proposed consent judgment submitted by the United States in an antitrust action may be approved by the Court, the Court must determine that "the entry of such judgment is in the public interest." 15 U.S.C. § 16(e). The statute does not explicitly define "public interest." It does, however, list factors that the Court may consider in making its public interest determination. These factors are:

(1) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration or relief sought, anticipated effects of alternative remedies actually considered and any other considerations bearing upon the adequacy of such judgment;

(2) the impact of entry of such judgment upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.

15 U.S.C. § 16(e).

Extrapolating from these factors, courts have developed a two-prong public interest inquiry. First, courts inquire as to whether the proposed relief effectively will foreclose the possibility that antitrust violations will occur or recur. See American Tel. and Tel., 552 F.Supp. at 150.³ Second, courts consider whether the relief impinges upon other public policies. See, e.g., United States v. BNS, Inc., 858 F.2d 456, 463 (9th Cir.1988) ("the statute clearly indicates that the court may consider the impact of the consent judgment on the public interest, even though that effect may be on an unrelated sphere of economic activity"); American Tel. and Tel., 552 F.Supp. at 151. Thus, "if the decree meets the requirements for an antitrust remedy—that is, if it effectively opens the relevant markets to competition and prevents the recurrence of anticompetitive activity, all without imposing undue and unnecessary burdens upon other aspects of the public interest—it will be approved." Id. at 153 (footnote omitted).⁴

In applying this test, the Court's review is somewhat limited. "The balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General." United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083, 102 S.Ct. 638, 70 L.Ed.2d 617 (1981). Thus the Court need not find that the proposed decree is the best possible solution, but only that it is "within the reaches of the public interest." United States v. Gillette Co., 406 F.Supp. 713, 716 (D.Mass.1975); see also Bechtel, 648 F.2d at 666; United States v. Gillette Co., No. 90-0053, 1990 U.S.Dist. LEXIS 9530, at 2 (D.D.C.1990); American Tel. and Tel., 552 F.Supp. at 151; United States v. National Broadcasting Co., 449 F.Supp. 1127 (C.D.Cal. 1978).

The Proposed Final Judgment

The government alleges that defendants have used the ATP fare dissemination system in a manner that enables them to reach price-fixing agreements or unnecessarily to facilitate fare coordination. The proposed final judgment is designed to protect against the continuance of such behavior either through the use of the ATP fare dissemination system, or through any similar mechanism. The proposed final judgment contains several categories of prohibited conduct. Section IV(A) contains general prohibitions on agreements between airlines "to fix, establish, raise,...