SABRE WINS DOJ ANTITRUST CASE
April 18, 2020
In August 2019, the U.S. Department of Justice (DOJ) sought to block the merger of Sabre and Farelogix on anti-competition grounds. On April 7, 2020, a Delaware federal court ruled that the DOJ failed to prove that Sabre’s $360 million purchase of Farelogix would substantially lessen competition for booking services for airline tickets sold through traditional travel agencies in the U.S.
Sabre is the United States’ largest global distribution system, connecting more than 400 airlines and thousands of hotels and car rental companies to both online and in-person travel agents. Farelogix, on the other hand, had developed Farelogix Open Connect, or FLX OC, which is software that airlines use to power their websites and mobile apps.
The court dismissed the DOJ’s arguments on “nascent competition”, finding that Sabre was not necessarily acquiring Farelogix to remove them as a competitor. Furthermore, the court found that DOJ’s defined market of “booking services” was not a term the industry used and accounted for only a portion of Sabre’s business. The court also relied on the U.S. Supreme Court’s 2018 American Express case (Ohio v. American Express Co., 138 S. Ct. 2274 (2018)) on two-sided markets, finding that because Sabre was a two-sided market, connecting with both airlines and travel agents, and Farelogix was a one-sided market, only connecting with airlines, the two companies could not truly be in competition.
DOJ now has the option to appeal the court’s decision, though DOJ usually will not appeal such a decision as it is difficult to win appeals in antitrust cases. The matter is also not fully settled for Sabre and Farelogix, as the U.K.’s Competition and Markets Authority also attempted to block the merger, and issued a provisional finding that the merger should be blocked. The U.K. Authority is expected to release its final decision later this week.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Andy Orr (aorr@eckertsemans.com or 202-659-6625).
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