Antitrust: DOJ, FTC Propose New Vertical Merger Guidelines: DOJ Opposes Sabre Acquisition of Farelogix in Court
February 19, 2020
On January 10, 2020, DOJ’s Antitrust Division and the U.S. Federal Trade Commission (FTC) announced an update to a key element of U.S. competition law – draft Vertical Merger Guidelines. These guidelines set forth the standards for how DOJ and FTC administratively examine vertical mergers (i.e., those that combine two or more companies operating at different levels in the same supply chain) and whether to recommend against approving a given proposed deal. According to DOJ, “the draft guidelines:
- Describe potential anticompetitive effects resulting from vertical mergers, which may include both unilateral and coordinated effects;
- Identify foreclosure and raising rivals’ costs and access to competitively sensitive information as potential elements of antitrust harm under unilateral effects;
- Describe an analytic framework for analyzing potential anticompetitive effects of foreclosure and raising rivals’ costs;
- Discuss how the elimination of double marginalization may mitigate or completely neutralize the potential anticompetitive effects of vertical mergers;
- Discuss cognizable merger efficiencies that are specific to vertical mergers;
- Provide a number of examples to provide more clarity about the agencies’ analytical methods in evaluating vertical mergers.”
In a high-profile example of an opposition to a vertical merger involving the travel technology space, DOJ Antitrust Division attorneys were in the U.S. District Court for the District of Delaware this month opposing the acquisition of airline booking company Farelogix by Sabre Corp. (Sabre) for $360 million. Sabre is one of the world’s three largest global distribution systems (GDS) alongside Amadeus and Travelport. Farelogix is a software company whose Airline Commerce Gateway, among other services, provides data-driven retailing to airline clients. Despite the pending merger Farelogix has historically complained to U.S. antitrust regulators that Sabre has tried to hinder its growth as a competitor. DOJ argued that Sabre is a dominant legacy competitor in its market who could stifle competition in travel technology by acquiring an innovative competitor in Farelogix.
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).
Share This Post
Authors
