TY - JOUR
AU - Nevo, Aviv
AB - I. Introduction to Sabre/Farelogix On 14 November 2018, Sabre Corporation announced that it had reached agreement to acquire Farelogix Inc. for $360 million. On 20 August 2019, the US Department of Justice (‘DOJ’) filed a civil antitrust lawsuit seeking to block the transaction.1 At this time, the UK’s Competition and Markets Authority (‘CMA’) continued its review of the proposed transaction. Following a two-week trial in January and February 2020, the United States District Court for the District of Delaware (the ‘US Court’) issued its Opinion on 7 April 2020, denying the DOJ’s request to block the merger, stating that ‘DOJ has failed to meet its burden of proof’.2 Shortly thereafter, on April 9, the CMA issued its final report, detailing its decision to prohibit the deal and concluding that it ‘may be expected to result in a substantial lessening of competition’.3 The parties abandoned the deal on 1 May 2020 citing the CMA’s decision,4 which they unsuccessfully appealed on jurisdictional grounds.5 In July 2020, Farelogix was purchased by the Accelya Group. Interestingly, the US Court and the CMA arrived at different conclusions despite agreeing on several key facts. For example, both the US Court and the CMA note that: (i) Sabre and Farelogix viewed each other as competitors,6 (ii) Farelogix was a meaningful alternative for distribution of airline tickets to travel agents7 and (iii) Sabre would have the incentive to raise prices, reduce availability of Farelogix’ product and stifle innovation.8 Key points The Sabre decision suggests that US courts might require a particularly high standard of proof in mergers involving claims of potential competition challenged under Section 7 of the Clayton Act. The UK enforcement system seems to have greater flexibility, which at least in part allowed the CMA to reach a different conclusion than the US Court. The high standard of proof and the divergence with the UK system are especially likely to be relevant in cases involving two sided platforms, where the American Express decision casts a long shadow on US enforcement efforts. Despite these findings, the US Court came to a different enforcement decision than the CMA. It seems that the US Court struggled to reconcile the evidence it was shown. Indeed, the US Court was aware that its ruling for Defendants would ‘strike some…as odd’ since ‘[o]n several points that received a great deal of attention at trial...the Court is more persuaded by DOJ than by Defendants’.9 But the US Court repeatedly emphasized that it was the DOJ’s burden to prove its case and observed that DOJ failed to do so persuasively.10 In this article, we discuss the economic issues raised by this case about competition in markets involving platforms and the challenges that agencies face when evaluating mergers involving potential competition. Our discussion starts with a review of the two sides of the economic arguments that played out in the US litigation, including the US Court’s interpretation of the evidence and some of the unresolved tensions in its conclusions. We then discuss how issues related to two-sided markets, including the US Court’s application of precedent from the US Supreme Court’s ruling in American Express, shaped the US litigation and constrained the US Court despite tension with the facts established at trial. Finally, we explore potential explanations for the divergence in outcomes at the CMA and US Court. Specifically, we discuss differences between the competition enforcement systems on the two sides of the Atlantic, noting that in several ways the UK system offers more flexibility for the CMA than the US system does for US courts. We suggest that in Sabre this difference helps explain the divergence between the CMA and the US Court decisions and allowed the CMA to arrive at an enforcement decision more consistent with the basic economics of this particular case. A counter argument is that too much flexibility potentially allows the regulator to make decisions that are difficult to check, which might put due process at risk. Therefore, in principle too much flexibility might lead to decisions that are less consistent with basic economic principles. II. Industry background Before turning to our analysis, we briefly describe the industry and the roles the merging parties play in this industry. Airlines typically sell tickets to travellers through travel agents, whether traditional travel agencies or online agencies, and through the airlines’ own websites (‘airline.com’). In the USA, traditional travel agencies are often used by business travellers and account for roughly a quarter of the sales. Online agencies, such as Expedia, account for another quarter. The rest are sales through airline.com. Global distribution systems (‘GDSs’) are software platforms for booking, ticketing and other transactions between airlines and travel agents. The GDSs offer several related yet separate services that are typically offered as a bundle. First, GDSs help an airline construct an ‘offer’ in response to a query by a travel agent. Next, the GDSs aggregate offers across different airlines. Finally, the GDSs deliver the offers to the travel agents and process resulting orders and changes to these orders. This last function was referred to as ‘booking services’ by the DOJ and was the heart of the issues in this case. Sabre is one of three large GDSs, the other two being Amadeus and Travelport. In 2018, its revenue was approximately $3.9 billion. In the USA, Sabre controls over 50 percent of bookings through US travel agencies, and an even larger share of the sales through the travel management companies that are often used by business travellers.11 Farelogix is a travel technology company that sells various technology services to airlines. In 2018, its revenues totaled roughly $42 million, around 1 percent of Sabre’s revenue and just over 10 percent of the $360 million Sabre agreed to pay to acquire Farelogix. Farelogix was a pioneer in developing the New Distribution Capability (‘NDC’) standard, which powers its Open Connect product (‘OC’). The latter was the main Farelogix product of interest in the US case. At an intuitive level, the functions performed by the GDSs seem simple enough. In practice, they are quite complicated since they involve combining data from several data sets (often based on legacy software), within an airline and across airlines, and then displaying them to travel agents in a way that allows quick cross airline comparisons. To complicate things further, travel agents tend to use a single GDS, which potentially gives the GDSs a source of market power and is consistent with the durable concentration observed in this industry. The traditional GDS payment model was to charge airlines a booking fee for each segment that was booked using the GDS, and pay the travel agency to induce it to book through the GDS. At the time of the trial, NDC in general, and OC specifically, was poised to transform airline distribution. NDC allows the airline to make personalized offers to travellers who book through travel agents, much like they can through airline.com. These offers could include, for example, the ability to bundle priority boarding, premium seating and meals with the ticket. The legacy GDS technology does not have these abilities. Furthermore, NDC allowed for higher standardization, which would facilitate the unbundling, or disintermediating, of the GDS services. III. Two sides of the argument in the US litigation In many ways, the facts of the industry were not in real dispute. What was in dispute was the implications of these facts to the future of competition. The DOJ alleged that Farelogix’s services were an important (if not quite unique) means for airlines to facilitate transactions with travel agents, either by completely bypassing the GDS or by continuing to use the GDS but substituting some of the GDS services with technology from Farelogix (referred to as GDS pass-through). In its complaint, the DOJ claimed that the elimination of Farelogix as either an option for bypassing the GDS or for GDS pass-through would lead to higher prices and a reduction in the bargaining leverage for the airlines when negotiating with the GDSs. The DOJ also claimed that the elimination of Farelogix, which was a leading innovator in the industry, would reduce innovation. The merging parties, on the other hand, claimed that Sabre and Farelogix did not compete, because Sabre was a two-sided platform and Farelogix was not, and because Sabre did not offer the services Farelogix offered on a standalone basis. They went on to claim that the merger would be pro-competitive because the future use of NDC was not as a bypass to the GDS but used as part of it (by replacing the existing software used to deliver booking services). Thus, they argued that the services that Farelogix offers are better thought of as complements to Sabre’s services and therefore the merger would make Sabre more competitive with other GDSs. Amadeus in particular was identified as the GDS that seemed to be ahead of the others in including NDC technology into its offerings. At a high level, the case was a difficult one for the DOJ because it challenged an acquisition by a large, established technology firm of a company that was much smaller but would allegedly become a much stronger competitor in the future. In this section, we discuss the two sides of some of the economic arguments in the US litigation. We focus on several important issues that seem to have been central to the US Court in arriving at its decision. Understanding these issues will help us highlight the differences with the CMA’s decision. These include the market definition alleged by the DOJ, the DOJ’s structural case and the US Court’s interpretation of the competitive effects evidence. A. Market definition The DOJ defined two relevant product markets: booking services for airline tickets sold through traditional agencies and booking services for airline tickets sold through online travel agencies. Two elements of these definitions were heavily disputed: the very notion of ‘booking services’ and the relevance of airline.com. First, DOJ argued that ‘booking services’ were ‘IT solutions that enable airlines to deliver their offers to travel agencies and to process resulting orders’12. The merging parties did not dispute that the Sabre GDS offered these services to airlines. However, they argued that Sabre did not offer booking services as a separate product and that booking services therefore had no independent economic significance.13 To support their position, they claimed that since there was no observable price charged by Sabre for the booking services component of its bundled product that booking services could not be a meaningfully defined product. The DOJ acknowledged that Sabre had not sold booking services separately, but noted there were alternative methods for airlines to obtain booking services. Specifically, an airline could obtain booking services using Farelogix’ OC product. It was this threat of using technology from Farelogix to disintermediate the GDS that was the root of the competition between Farelogix and Sabre that the DOJ argued would be lost because of the merger. The disintermediation of the GDS could be through offering an alternative to the GDS (i.e., a bypass to the GDS) or by combining the Farelogix service with the GDS by replacing only the booking service function of the GDS (i.e., offering a pass through and therefore partially disintermediating the GDS). The DOJ claimed that, either way, the Farelogix service was a threat to the GDS business model. When discussing competitive effects, the US Court acknowledged that the merging parties compete to provide what the DOJ referred to as booking services, noting that, ‘Sabre and Farelogix view each other as competitors, both to supply NDC APIs and for a component of the traditional full-service GDS’.14 This highlights that the existence of the relevant competition did not rest on whether Sabre had previously chosen to offer booking services separately from its bundled offering. In some sense, this should have been the end of the argument, since the US Court repeatedly agreed that Sabre and Farelogix compete.15 Yet the US Court felt that the DOJ did not meet its burden in the context of the market definition. In part this is due to the complexity of the bundled product offered by Sabre, which made it difficult for the DOJ to make certain market definition showings that are customary in US merger litigations. For example, conducting a hypothetical monopolist test, a standard part of the US Horizontal Merger Guidelines’ market definition exercise, is difficult if there is no observed and separate price for Sabre’s booking services. Second, the other element of market definition that was hotly disputed was the relevance of airline.com. The DOJ defined the market around distribution of airline tickets to travel agents and excluded distribution through airline.com. In support of excluding airline.com from the market, the DOJ claimed that a hypothetical profit maximizing monopolist over booking services for tickets sold through agents would impose a small but significant non-transitory increase in price (SSNIP) because the airlines would not risk losing sales of tickets to travellers who would not switch from travel agents to airline.com. This was especially true since an SSNIP on booking service was small relative to the price, and margin, on the ticket. It was also especially true in the case of traditional travel agents, who offered additional services not relevant to online agents. The challenge the DOJ faced was that negotiations between airlines and GDSs are complex and involve a variety of contract terms. The merging parties built on this and claimed that the DOJ’s test was detached from market realities, or one could say too hypothetical. They also pointed to the intuitive but somewhat irrelevant fact that roughly 50 percent of all airline tickets were distributed through airline websites. The US Court seemed to get lost in the details of the DOJ’s analysis and dismissed the exercise for not reflecting reality. For example, the US Court criticized the analysis for not allowing airlines the option to walk away from a negotiation with a GDS,16 and concluded that ‘airline.com and [online travel agents] are reasonably interchangeable’.17 This is despite concluding earlier in its opinion that airlines must distribute through all three GDSs to reach all travellers who book through travel agents.18 In other words, that many travellers cannot be reached by airline.com and can only be reached through a GDS without NDC, a GDS with NDC pass through or GDS bypass. Therefore, an airline that wants to reach the entirety of travellers logically cannot walk away from negotiations with a GDS. B. Structural case and presumption of harm As is common for the government in US merger litigations, the DOJ started their analysis of competitive effects first around a structural analysis of market concentrations and changes in concentrations that would result from the proposed merger. This might seem surprising in a case involving potential competition, since the potential competitor will typically have a small, or zero, pre-merger share. Interestingly, this was not the case here. The merging parties and the government all expected the use of Farelogix to facilitate bookings to increase over time. Accounting for this growth, the market concentrations presented by the DOJ were above the standard thresholds to trigger a presumption of harm.19 One might think that the existence of a structural presumption would have strengthened the DOJ’s case. However, the focus on the structural case elevated the prominence of several issues that might have actually hurt the DOJ’s case. First, the DOJ attributed to Farelogix bookings that used OC to pass through, or partly disintermediate, the GDS, under the logic that the use of Farelogix for these bookings by airlines displaced the booking services component of the GDS bundle and therefore was a competitive threat to the GDS. The parties, on the other hand, argued that these bookings should be attributed to the GDS. The US Court sided with the merging parties on the issue, criticizing the DOJ’s market share calculations when airlines used OC for GDS pass through. While the DOJ’s calculations attributed such bookings (which partly disintermediate the GDS) to Farelogix, the US Court noted that ‘the GDS controls the sale and the commercial relationship’.20 This conclusion was in conflict with the US Court’s earlier acknowledgement that GDS fees are likely to be reduced under GDS pass through,21 which is consistent with DOJ’s position that the competitive relevance of these bookings should be attributed to Farelogix. Second, the focus on the structural case also elevated the debate regarding airline.com. The inclusion of airline.com when computing market shares reduced concentrations below the levels necessary for a presumption of harm. The rest of the government’s competitive effects case did not depend on airline.com being outside the relevant market. Yet, having lost the argument over the inclusion of airline.com in the market the DOJ might have lost some credibility in the eyes of the US Court. One is left to wonder how the outcome would have changed if the DOJ had not pursued the structural case. C. Competitive effects evidence and the US Court’s interpretation As noted above, having no well-defined price for Sabre’s booking services made it difficult for DOJ to perform empirical analysis that is otherwise common in US merger litigation. For example, it was essentially impossible to empirically measure elasticities and there was no merger simulation to empirically ‘show’ what the postmerger pricing incentives would be. However, the DOJ was not without evidence supporting its theory of harm. There was substantial support that competition from Farelogix had been a constraint on Sabre pricing, with Farelogix being used as leverage by airlines to keep prices down. This included testimony by Sabre’s own expert during trial and his testimony from prior Sabre litigation in which he effectively endorsed the DOJ’s theory of harm. For instance, the US Court noted that Defendants’ expert ‘concluded that direct connects [offered by Farelogix] can be a competitive constraint on GDSs and that ‘GDS bypass is somewhat of a threat’ to Sabre’.22 The evidence was sufficient for the US Court to conclude that the ‘evidence suggests that Sabre will have the incentive to raise prices, reduce availability of FLX OC, and stifle innovation’. And yet, the US Court did not view past behavior and forward-looking economic incentives as sufficient in coming to a forward-looking assessment of the merger. For example, the US Court dismissed evidence from ordinary course documents in which a Sabre executive recommended that Sabre increase prices postmerger (an action that would be consistent with the evidence presented by DOJ on Sabre’s past behavior and its postmerger economic incentives), saying that ‘no evidence has been presented that anyone at Sabre or Farelogix has taken steps to act on this recommendation’.23 The implication that the US Court may need to see evidence of the two merging firms actively taking steps prior to closing the deal to raise the very prices that were at issue in the government’s theory of harm during regulatory review and litigation is puzzling, to say the least (and likely the basis of the DOJ’s appeal of the US Court’s opinion). Regardless, the US Court concluded that the evidence presented by the DOJ did not persuade that Sabre ‘will likely act consistent with its history or these incentives to actually harm competition’ should the merger be allowed. Rather than giving weight to the evidence that Sabre would have the incentive to increase its prices and reduce availability of Farelogix, the US Court gave credit to the merging parties’ efficiencies claims. It argued that Sabre’s acquisition of Farelogix would be an efficient way for Sabre to ‘use new technology to deliver services airlines and agencies are demanding’24 and gave credit to third party testimony to the merger enabling more efficient delivery of service.25 Yet, it did so while also explaining that Sabre was already working on surpassing Farelogix’s capabilities by 2020,26 which called into question the merger specificity of any quality efficiencies claimed by Sabre. In addition, the US Court emphasized that ‘Sabre’s Story Is Not Credible’ and walked through numerous instances of statements by Sabre and Farelogix executives that were inconsistent with the factual record and other evidence presented during the trial.27 For instance, the US Court noted that Sabre CEO’s testimony that ‘GDS bypass is not a threat to Sabre’ was ‘not credible as it does not comport with the record’.28 In our view, the US Court struggled to make sense of the competitive effects evidence. It ultimately left unresolved numerous contradictions and instead of reconciling the contradictions in its findings it relied on a high evidentiary bar to reject the DOJ’s case. That is, the US Court seemed to interpret the Clayton Act standard as requiring evidence that a merger ‘will’ cause harm (and not that the merger’s effect ‘may be substantially to lessen competition, or to tend to create a monopoly’, as the statute states). IV. Two sides of the market Another important aspect of this case was the focus on competition involving two-sided platforms. In this section, we discuss how issues related to two-sided markets and the legal precedent from the US Supreme Court ruling in Amex played a role in shaping analysis, competitive assessment, and outcomes in Sabre. As we previously noted, the traditional GDS payment model involved collecting a per-booking fee from the airlines and providing inducements to the travel agents to use the GDS. In many ways, this parallels the American Express business model, which was at the center of Amex, where merchants pay a per transaction fee and customers are provided incentives (in terms of points and cash back) to use the card. Indeed, the DOJ’s analysis in Sabre was consistent with two important aspects of the Amex decision. First, the DOJ’s market definition was based on transactions, consistent with the US Supreme Court decision. Second, the DOJ’s expert economist provided evidence, which was largely unrebutted, that the increased fees likely due to the merger, would not be completely offset by higher inducements to travel agents. Again, this is in line with the US Supreme Court’s requirement in Amex that the competitive effects on both sides of the market be evaluated jointly. Nevertheless, the Amex precedent played an important role in Sabre. The US Court concluded that Sabre was a two-sided platform since both airlines and travel agents were its customers.29 Farelogix, on the other hand, only contracted with airlines and therefore did not fit the standard view of a two-sided platform. These facts were mostly not in dispute. What came next, however, was highly in dispute. The US Court interpreted the Amex decision as saying that as a matter of law a two-sided platform does not compete in the same market as a one-sided platform. This interpretation, together with the facts in the previous paragraph, led the US Court to conclude that Sabre and Farelogix were not competitors as a matter of law.30 We will leave to others to comment on whether the US Court read Amex correctly as a matter of law that ‘[o]nly other two-sided platforms can compete with a two-sided platform for transactions’. We note that as a matter of economics there is no categorical reason that a one-sided firm cannot compete with a two-sided firm. Indeed, as we noted above, Sabre’s own economic expert agreed that the services offered by Farelogix were a competitive constraint on the Sabre platform. Furthermore, this conclusion is in direct contradiction to other findings in the decision. First, the US Court clearly found that Sabre and Farelogix competed in the past. Second, the US Court accepted Defendants’ argument that transactions booked on airline.com should have been included in the market. Yet the airlines, who are responsible for transaction on their own websites, are not two-sided platforms. airline.com does not serve third party airlines, nor does it serve travel agents, who are one side of the GDS platform. The US Court seemed to be aware of the tension between the interpretation of the law and the facts in this case and acknowledged that ‘while the government has accurately characterized the record, the facts presented in the instant case cannot change the binding precedential law issued by the Supreme Court’.31 One is left to wonder if the various findings discussed in the previous section was the US Court’s attempt to reconcile the legal precedent with the facts of the case. V. Two sides of the Atlantic As previously noted, the UK CMA and US Court agreed on many findings in this case yet arrived at different conclusions. In this section, we briefly discuss several differences in the US and UK systems that ultimately played a role in shaping the analysis, competitive assessment, and outcomes. In several ways, the UK system offers more flexibility for the CMA than the US system does for the US courts. In Sabre, this difference helps explain how and where the CMA and US Court diverged. This played out in market definition and the structural case, as well as in establishing the burden of proof. Market definition is an inextricable part of the US framework. The Section 7 Clayton Act prohibition of mergers that lessen competition ‘in any line of commerce in any section of the country’ has been interpreted to require market definition. The 2010 Horizontal Merger Guidelines step back from market definition as a necessary step, yet the Guidelines are not binding on courts. In practice, the US antitrust agencies need market definition in order to establish a presumption of harm. As a result, the structural case and the presumption of harm are often the focus of the government’s case. This was the case in Sabre and, as noted earlier, might have hurt the government’s case more generally. In the UK, the CMA has moved away from market definition, in line with the 2010 US Guidelines. Because the CMA is less constrained by precedent, this move has affected enforcement decisions more than in the USA. In Sabre, it seems like the US Court was unwilling to look past several ‘technical’ elements of market definition and the structural case. Therefore, despite concluding that the merging parties competed in the past, the US Court refused to find that the merger would lead to a lessening of competition. The CMA, on the other hand, found that it was ‘appropriate to assess direct and indirect channels in the same product market’, but made clear that whether airline.com (direct channel) was in the market did not ‘materially’ affect the CMA’s conclusion.32 Furthermore, the CMA in its decision made no attempt at a structural case and barely discussed market shares and concentrations. The constraint of legal precedent was also clearly present with respect to the relevance of two-sided markets, where, as we discussed in the previous section, the US Court seemed bound by a reading of a Supreme Court decision that clearly was in conflict with the facts of this case. The CMA was not bound by such a constraint.33 The CMA also seemed to apply a more lenient burden of proof. As we noted earlier the realities of the market made a detailed empirical measurement of elasticities nearly impossible and a merger simulation unlikely to be persuasive. The CMA seemed to realize this fact, and explained that its approach is ‘necessarily prospective’ given that it is ‘required to assess the impact of the merger on rivalry over time’.34 The CMA acknowledged the complexity of the market and the difficulty of making predictions in a dynamic marketplace and therefore ‘considered all the evidence in the round and in its relevant context’ and ‘exercised [its] judgment to determine how each type of evidence informs [its] assessment of future competitive dynamics’.35 The US Court rejected such reasoning, noting that ‘DOJ offers nothing more in support of its contention than vague theories’ and that ‘these generalities do not help the Court conclude that the merger would harm innovation’.36 VI. Concluding comments The Sabre case provides important insights into future cases involving potential competition and two-sided platforms, and how the outcomes might be different on the two sides of the Atlantic. The US Court’s application of Amex in Sabre has meaningful implications for future competition enforcement, including the US government’s ability to bring cases in the many new and evolving complex industries for which two-sided market issues are increasingly relevant (e.g., tech/platforms). Enforcers in Europe will not face the same constraints, both due to the lack of the Amex precedent and the more attenuated judicial check on their decision-making in their jurisdictions. The additional flexibility afforded by the UK system has advantages and disadvantages. In Sabre, the additional flexibility of the UK system allowed the CMA to arrive at an enforcement decision that was more consistent with basic economics and many of the fundamental facts, and in that sense was seemingly more ‘correct’. In the US, rigidities in the process resulted in the US Court being constrained and getting bogged down in details, ultimately leading to a decision in considerable tension with these same basic findings. On the other hand, it is not clear that greater flexibility necessarily leads to consistently better outcomes. Providing the regulator with too much flexibility can result in decisions that are difficult to check and can seem speculative, putting due process at risk. The additional flexibility built into the UK’s system also means that it is more open to theories of harm that push the frontier, such as nascent competition. The Sabre decision suggests that US courts might ask plaintiffs to fit ‘square pegs into round holes’ in order to meet past precedent. US Courts might also require, at times, unrealistic burdens of proof compared to the UK. In light of the Sabre decision, US enforcers may need to follow more innovative approaches to challenge acquisitions of nascent competitors. For example, in challenging Visa’s acquisition of Plaid shortly after the Sabre decision, the DOJ alleged a violation of Section 2 of the Sherman Act. We note that the flexibility allowed to the CMA does not always lead it to more stringent outcomes than the US agencies. For example, the DOJ challenged Visa/Plaid while the CMA cleared it. Footnotes 1 DOJ, ‘Justice Department Sues to Block Sabre’s Acquisition of Farelogix,’ 19-878 (20 August 2019). 2 Opinion, US v. Sabre Corp., et al., 1:19-cv-01548-LPS, April 8, 2020 (‘Opinion’), p. 1. 3 ‘Anticipated acquisition by Sabre Corporation of Farelogix, Inc.,’ Final Report, Competition & Markets Authority, April 9, 2020 (‘CMA Decision’), p. 6. 4 ‘Sabre Corporation Issues Statement on its Merger Agreement with Farelogix,’ (Southlake, Texas 1 May 2020), https://www.sabre.com/insights/releases/sabre-corporation-issues-statement-on-its-merger-agreement-with-farelogix/. 5 ‘Judgment between Sabre Corporation and Competition and Markets Authority,' Competition Appeal Tribunal, 21 May 2021. 6 Opinion (n 2), p. 118, CMA Decision (9.173–9.175, 9.191–9.195) pp. 198–199, 204–206. 7 Opinion (n 2), p. 89, CMA Decision (45–47) p. 14. 8 Opinion (n 2), p. 87, CMA Decision (49–51, 78–97) pp. 20–25. 9 Opinion (n 2), pp. 91–92. 10 Opinion (n 2), pp. 1, 73, 79, 84, and 92. 11 DOJ complaint, p. 2. 12 DOJ Complaint, ¶ 1. 13 They also argued that ‘booking services’ was not a term used in the normal course of business, but did not dispute that similar terms were used to refer to the IT services in question. 14 Opinion (n 2), p. 58 (emphasis added). 15 A few examples include, `a preponderance of the evidence shows that Sabre and Farelogix do view each other as competitors,' `Sabre considers Farelogix a competitor in developing NDC technology for direct connects,' `the record reflects competition between Sabre's and Farelogix's direct connect solution for major airlines,' `Farelogix identified Sabre as a `key competitor' in order delivery and offer management,' describing Farelogix as `the GDSs' leading competitor,' and acknowledgement of airline testimony that `Farelogix provides airlines with an alternative to the GDS for distributing content to travel agencies.' Opinion (n 2), pp. 31–32. 16 Opinion (n 2), pp. 49–50. 17 Opinion (n 2), p. 79. 18 Opinion (n 2), p. 17. 19 Plaintiff’s Pretrial Brief, pp. 12–13 (https://www.justice.gov/atr/case-document/file/1235306/download); DOJ’s closing statement, slide 23 (https://www.justice.gov/atr/case-document/file/1245856/download). 20 Opinion (n 2), pp. 17, 84. 21 Opinion (n 2), p. 43. 22 Opinion (n 2), p. 55. 23 Opinion (n 2), p. 89. 24 Opinion (n 2), p. 65. 25 Opinion (n 2), p. 65. 26 Opinion (n 2), p. 65. 27 Opinion (n 2), p. 54. 28 Opinion (n 2), p. 54. 29 Furthermore, in its September, 2019 decision in a Section 2 Sherman Act case against Sabre, the Second Circuit also applied Amex to find that the Sabre GDS is a two-sided transactions platform because it offers services to both airlines and travel agents. Decision of United States Court of Appeals for the Second Circuit, In US Airways, Inc., for American v. Sabre Holdings Corporation, 11 September 2019, p. 28. 30 Opinion (n 2), p. 69. 31 Opinion (n 2), p. 70. 32 CMA noted that airline.com was most relevant for travelers who do not require travel agents and who may otherwise use online travel agents (rather than traditional travel agents), but unlike in the US case there was no formal allegation of separate online travel agents and traditional travel agents markets. 33 Cyril Ritter, ‘Antitrust in Two-Sided Markets: Looking at the U.S. Supreme Court’s Amex Case from an EU Perspective,’ Journal of Competition Law & Practice, 2019, Vol. 10, No. 3, at p. 179. 34 CMA Decision (n 3), p. 280. 35 CMA Decision (n 3), p. 280. 36 Opinion (n 2), p.90. Author notes Kostis Hatzitaskos is a Vice President at Cornerstone Research, khatzitaskos@cornerstone.com Brad Howells is a Principal at Cornerstone Research Aviv Nevo is the George A. Weiss and Lydia Bravo Weiss University Professor at the University of Pennsylvania and former Deputy Assistant Attorney General for Economics in the Antitrust Division of the US Department of Justice. Professor Nevo was the US Department of Justice economic expert for Sabre/Farelogix. Drs. Hatzitaskos and Howells supported him. The views expressed in this article are solely those of the authors and are not purported to reflect the views of Cornerstone Research or the US Department of Justice © The Author(s) 2021. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - A Tale of Two Sides: Sabre/Farelogix in the United States and the UK
JF - Journal of European Competition Law & Practice
DO - 10.1093/jeclap/lpab047
DA - 2021-06-26
UR - https://www.deepdyve.com/lp/oxford-university-press/a-tale-of-two-sides-sabre-farelogix-in-the-united-states-and-the-uk-ktV4R0eewf
SP - 1
EP - 1
VL - Advance Article
IS - 
DP - DeepDyve
ER -