Oberstar expresses disappointment in US DOJ approval for Continental-United merger

Washington DC
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US merger opponent representative James Oberstar believes approval from the country's Justice Department of the proposed merger between Continental and United is "regrettable", and believes the transportation department should have broader authority in endorsing airline mergers.

On 27 August the Justice Department officially said it had closed its investigation of the Continental-United merger after those carriers agreed to transfer 18 slot pairs to Southwest Airlines at Continental's Newark hub.

The DOJ explains its examination of the proposed tie-up found potential for market domination between United's existing hubs, which include San Francisco, Chicago, Denver, Washington Dulles and Los Angeles, and Continental's Newark hub.

But Justice believes the transfer of the slots to Southwest at Newark removes any potential anti-trust violation.

Oberstar argues that the US Department of Transportation needs more authority in determining the effects of airline mergers on communities and customers.

"There must be a consideration of whether a merger will inevitably trigger others, ultimately reducing the industry to a few large carriers, each of which is unwilling to compete seriously in markets dominated by one of the others," says Oberstar.

During recent Congressional hearings examining the Continental-United merger, Oberstar threatened to introduce legislation to re-regulate airlines if the merger was approved. In a statement issued after DOJ closed the investigation he stated: "I believe it may be time for Congress to rethink its vote in 1978 [that deregulated the airline industry]."