Predation, Competition & Antitrust Law: Turbulence in the Airline Industry

Journal of Air Law and Commerce, Volume 67, Summer 2002

Posted: 31 May 2016

Multiple version iconThere are 2 versions of this paper

Date Written: May 29, 2002

Abstract

This essay is divided into several sections:

1. The first is theintroduction.

2. In the second, we examine the empirical evidence of predatory conduct. We examine how major airlines behave in three scenarios: (1) major airline vs. major airline; (2) major airline vs. Southwest Airlines; and (3) major airline vs. small low-cost/low-fare airline. It is in the third category that we see the most flagrant instances of predatory conduct.

3. In the third section we develop a case study to examine the efforts of the world’s largest airline to monopolize one of the world’s largest airports.

4. The fourth section of this essay provides a legal analysis of capacity dumping, pricing discrimination, predatory pricing, monopoly leveraging, refusing to deal, refusing to share an essential facility, raising rivals’ costs, and exclusive dealing arrangements. That analysis is heavily grounded in Sherman and Clayton Act applications, for the case law is well developed there, and the competition laws in the Federal Aviation Act have largely lain dormant for the two decades of deregulation. While the “unfair or deceptive practice” or “unfair method of competition” provisions of the Federal Aviation Act 9 are not constrained by Sherman and Clayton Act interpretations,10 nonetheless the DOT is free to apply analogous *692 standards to its interpretation of the Federal Aviation Act. Moreover, as explained below, many of the predatory practices of the major airlines may offend all three statutes.

5. In the concluding section, we address the policy dimensions of enhanced governmental oversight and enforcement of predatory behavior by large incumbent airlines against new entrants.

Keywords: Antitrust, Airlines, Predation, Pricing, Capacity, Monopolization

Suggested Citation

Dempsey, Paul Stephen, Predation, Competition & Antitrust Law: Turbulence in the Airline Industry (May 29, 2002). Journal of Air Law and Commerce, Volume 67, Summer 2002, Available at SSRN: https://ssrn.com/abstract=2786349

Paul Stephen Dempsey (Contact Author)

McGill University - Faculty of Law ( email )

3690 Peel Street
Montreal, Quebec H3AIW9
Canada

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