Judge blocks $3.8B JetBlue-Spirit merger, cites ‘anticompetitive harm’

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A federal judge on Tuesday blocked JetBlue Airways’ proposed $3.8 billion acquisition of budget carrier Spirit Airlines, agreeing with the Justice Department that the deal would hurt the availability of low-cost air travel tickets.

U.S. District Judge William Young wrote that the proposed merger between JetBlue and Spirit “does violence to the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm.”

Young also wrote, “The consumers that rely on Spirit’s unique, low-price model would likely be harmed.”

Spirit’s stock plunged on the news, falling as much as 55% during trading Tuesday afternoon before closing down 47%. Dow Jones Market Data group noted that Spirit’s stock neared all-time lows after the ruling and experienced its largest percentage decrease on record. JetBlue’s stock closed 4.9% higher on the news.

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JetBlue and Spirit can appeal the judge’s ruling if they still wish to pursue the merger.

The ruling comes as a rare win for the Biden administration’s efforts to block mergers and acquisitions that it views as harming competition. 

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The DOJ was joined by Democratic attorneys general from six states and the District of Columbia in arguing that a JetBlue-Spirit merger would reduce the number of flights available and result in higher prices for millions of traveling Americans.

They argued that letting JetBlue absorb its ultra-low-cost rival would “extinguish a vital source of low cost competitive disruption along more than 375 routes,” causing nearly $1 billion of net harm annually to consumers. 

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Spirit Airlines plane

Spirit was the first domestic U.S. airline to let passengers choose what features of their flights they pay for, such as checked bags and food and drink service – a model that caused competing airlines to cut prices, the DOJ said.

JetBlue’s lawyers argued the case was a “misguided” challenge to a merger between the sixth- and seventh-largest airlines in the U.S. that control less than 8% of the domestic market combined. 

For comparison, the four largest U.S. carriers – United Airlines, American Airlines, Delta Air Lines and Southwest Airlines – control 80% of the market following a series of previous airline mergers that received approval from the federal government.

This is a developing story. Please check back for updates.

Reuters contributed to this report.

Read the full article here

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