Saturday, August 17, 2013

Department of Justice sue to stop the merger of American Airline and US Airway today, citing consumers being hurt by higher prices and lesser choices. The market share of the companies: Delta (22%), Southwest (21%), United (17%), American (13%), and US Airway (12%), all others (15%).

The purpose of merge is to reduce industry wide capacity. Passengers are likely to face less choice and higher price.

While colluding to raise price is illegal, horizontal merger is not necessarily so. It is a complicated issue.

Argument for the merger 

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