Copyright 2000 Star Tribune
Star Tribune
(Minneapolis, MN)
June 16, 2000, Friday, Metro Edition
SECTION: BUSINESS; Pg. 1D
LENGTH: 632 words
HEADLINE: Be
careful, hearing told;
Hatch: Airline merger flirts with monopoly
BYLINE: Kristin Gustafson; Tom Hamburger; Staff Writers
DATELINE: Washington, D.C.
BODY:
After several economists offered mixed
appraisals of the proposed merger of US Airways and United
Airlines, public officials _ including Minnesota Attorney General Mike
Hatch _ warned a congressional panel Thursday of the implications of such a
deal.
Democratic Rep. Louise Slaughter joined
Hatch in urging the Justice Department to be wary of the $11.6
billion merger.
"If US Airways is swallowed by
United, I worry that my constituents and yours will face fewer choices, wretched
service and a pricing structure that would make a Mafia don blush," said
Slaughter. Unlike meetings earlier in the week,
Thursday's went beyond complaints of how such a merger might affect the folks
back home.
Smaller airlines such as Sun Country,
which is based in Mendota Heights, didn't take sides in the debate, but
explained instead how concentration in the industry has made competition
difficult. Large airlines have little fear of retribution when they engage in
anti-competitive practices because local authoritiesdon't tend to fight them,
said Tammy Lee, vice president of Sun Country Corporate Affairs.
Economists offered conflicting views on the
proposed merger, which would create the world's largest airline.
"Because United and US Airways have a modest
amount of route overlap, I believe the benefits from an enhanced network
outweigh the anticompetitive effects," said Steven Morrison, chair of Economics
at Northeastern University. Morrison provided one of the most upbeat assessments
of the merger offered by anyone not directly associated with it, except North
Carolina Sen. Jesse Helms, who endorsed it Wednesday without qualification.
Another economist said the amount of overlap
between the two carriers has been understated. Because of the nature of the
nation's hub system, he said that airlines actually compete on more than a
thousand routes.
"The merger would almost
certainly reduce the competition in many markets, thereby raising antitrust
concerns," said Clinton Oster Jr., a professor at Indiana University.
Law professor Paul Stephen Dempsey of the
University of Denver echoed the populist sentiments of several Minnesota
officials, saying that government activism is needed to prevent a monopoly in
the rapidly concentrating aviation industry.
"The major airlines forget that the people own
the airports and the airways," he said. "Competition is consistent with the
public interest; monopolization is not."
Hatch
made a similar argument. "When you see major mergers like this going on that
have no discernable economic benefit to the public in the long term . . . we
need to look at how to enforce antitrust laws on a national level" he said
Thursday.
Minnesota Sen. Rod
Grams has stayed out of the fray this week. Decisions about airline mergers
should be considered by regulatory authorities and should not be influenced by
politics, a Grams aide said Thursday.
Hatch went
out of his way after the hearing Thursday to explain why public discussion of
the deal is important.
"One bit of naivete is
that antitrust laws are easy to enforce," he said. "They are incredibly
inefficient, very difficult, very expensive, very time-consuming, . . . it does
demand a great deal of effort by a community _ whether a state attorney general
or on a national scale of the department of justice . . . ideally competition is
supposed to be there."
Hatch said he and 19
other attorneys general have urged the Justice Department to be cautious,
particularly because it may lead to other mergers.
American Airlines executives have talked in
recent weeks with officials of Eagan-based Northwest Airlines and with officials
from Delta Airlines about possible mergers.
GRAPHIC: PHOTO
LOAD-DATE: June 16, 2000 
