Air Transport World

Post CAB uncertainties cloud anti-trust considerations. (Civil Aeronautics Board)

First came the freedom to enter and exit markets at will. Next came the freedom to charge whatever fares appeal to the marketplace. Next, as of Jan. 1, 1985, the airlines will have freedom to violate the nation's anti-trust laws. This is raising a lot of concern in these, the last few months before the industry's immunity from general anti-trust prosecution disappears along with the Civil Aeronautics Board.

As a regulated industry U.S. airlines have been exempt from the provisions of the Sherman Act of 1890, plus other statutes and legal precedents governing business behavior. CAB has permitted a variety of industry activities that normally would be illegal, because they are, or could be, anti-competitive. The Justice Department, the nation's anti-trust arbiter, could participate in CAB cases concerning anti-trust issues, but the Board's jurisdiction as regulator is primary.

All that will change January 1 for both domestic and international airline activities. The Airline Deregulation Act (ADA) of 1978 did not deal with all of the details of how remaining airline functions should be handled, including anti-trust. But, it has always been assumed that Justice would want and receive a sizable chunk of anti-trust responsibility.

There has been some skirmishing between Justice and the Department of Transportation over future responsibilities. DOT, particularly under former Secretary Drew Lewis, was aggressively trying to obtain as much former CAB authority as it could. The airlines, taking a look at the often-confusing Justice Dept. interpretation of anti-trust policy for other industries, figured they would be better off under DOT's umbrella. So the airlines have spent a good deal of time trying to convince politicians that DOT, not Justice, should receive some of CAB's former anti-trust power.

So far, that has not occurred. Because the Reagan administration was trying to avoid sunset legislation to tie up the loose ends remaining from the ADA--in order to preclude special interest measures--Justice and DOT struck a bargain. Justice would receive authority for all anti-trust matters, with the exception of the tariffs filed by international airlines. …

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