Antitrust Law Daily US Air's wings clipped in suit against Sabre
Wednesday, January 7, 2015

US Air's wings clipped in suit against Sabre

By Jeffrey May, J.D.

The federal district court in New York City has significantly limited the amount of damages US Airways, Inc. may seek in an antitrust suit against Sabre Holdings Corporation. The court granted Sabre's motions for partial summary judgment based on the statute of limitations and a settlement agreement with US Airways’ now-parent company American Airlines. However, the claims may still go to trial. For the most part, Sabre's motion for summary judgment based on the substance of US Airways' conspiracy claims was denied (US Airways, Inc. v. Sabre Holdings Corp., January 6, 2015, Schofield, L.).

US Airways filed suit against Sabre in April 2011, claiming that Sabre engaged in anticompetitive conduct in the market for flight and reservation information. Sabre operates a Global Distribution System (GDS)—a computerized system that helps travel suppliers, such as airlines, distribute tickets to travel agents and travelers. US Airways challenged two contracts with Sabre signed in 2006 and 2011. These contracts contained the same basic terms—including challenged “full content” provisions. According to Sabre, these provisions ensure Sabre's ability to offer travel agencies a full range of flight and fare options on equal terms with Sabre's competitors. US Airways alleged that the full content and related terms in its contracts with Sabre were an “unreasonable restraint of trade” in violation of Section 1 of the Sherman Act. In addition, the carrier contended that the Sabre conspired with competing GDSs Travelport and Amadeus to limit competition for content by agreeing (1) to demand full content from US Airways, and (2) to implement an industry standard method for distributing US Airways' “Choice Seats” product.

In April 2014, Sabre filed a motion for partial summary judgment based on the statute of limitations with respect to damages arising under the 2006 agreement, a motion for partial summary judgment based on a settlement agreement between Sabre and American Airlines, and a motion for summary judgment on the remaining claims. Yesterday, without elaboration, the court granted the motions for partial summary judgment based on timeliness and the settlement, and granted in part and denied in part the motion for summary judgment. The court intends to issue a full opinion after the parties have had an opportunity to seek redaction of certain information in the decision.

US Airways had sought between $317 and $482 million in overcharges and lost profits (before trebling), for conduct that took place from April 21, 2007 to March 31, 2014, and an injunction against the future enforcement of contractual provisions that enabled the alleged overcharges. The court ruled that US Airways may not seek injunctive relief and that damages would have to be limited to booking fee overcharges incurred from February 23, 2011 (the date the 2011 agreement between Sabre and US Airways became effective) through October 30, 2012 (the date of the settlement agreement between Sabre and American Airlines). The 2012 settlement apparently binds US Airways, even though the US Airways/American Airlines merger did not close until December 2013. At that time, US Airways began operating under the new American-Sabre GDS agreement, which included the full content provisions that US Airways challenged in the litigation.

Further, US Airways may not seek lost profits based on extra fees US Airways was unable to recover due to an alleged conspiracy to resist implementation of its "Choice Seats" program, under which travelers could reserve certain preferred seats in coach class for an extra fee.

The case is No. 11 Civ. 2725 (LGS).

Attorneys: Alicia K. Hancock, Andrew Frackman, and Charles P. Diamond (O'Melveny & Myers LLP) for US Airways, Inc. Lev Louis Dassin (Cleary Gottlieb Steen & Hamilton LLP) for Sabre Holdings Corp.

Companies: U.S. Airways, Inc.; Sabre Holdings Corp.

MainStory: TopStory Antitrust NewYorkNews

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