Did US airlines agree to cap travel agent commissions and then stage their announcements to make it look as if they were simply following the leader as usual?

That is the key question in an antitrust class action filed by US travel giant Travel Network against the major US carriers, which it accuses of conspiring to fix commissions at lower rates and then concealing the agreement by staggering their announcements. The same allegation was made in two other antitrust actions by travel agents and a threatened suit by the American Society of Travel Agents on behalf of its 25,000 members. The US Justice Department is also investigating whether airlines acted together or unilaterally in setting commission caps.

Unless the plaintiffs know more about an express agreement between airlines than they have disclosed so far, antitrust specialists predict these cases will fall back on the doctrine of 'conscious parallelism.' One case relies on it explicitly: says the plaintiffs' lawyer, each airline 'knew what the others were doing.'

Under this doctrine, parallel business conduct, such as one airline capping commissions at the same level as others, may be circumstantial proof of a conspiracy if there is evidence of that conspiracy.

To avoid penalising the lawful practice of following a rival's price leadership, courts generally require some proof that parallel behaviour is contrary to a defendant's economic self-interest. That suggests plaintiffs will argue that one airline could enlarge its market share by paying higher commissions, as some try to do through commission overrides and use of consolidators on international routes.

Without such evidence, 'it's a tough sled to show an inference of conspiracy simply by parallel behaviour,' warns Mark Hough, a Seattle-based antitrust specialist. n

Source: Airline Business