US: Irrelevance grows for merger law

According to reports, the rarely-observed Tunney Act merger waiting period could potentially alter the settlement reached between the US Department of Justice and American Airlines and US Airways.

Officially known as the Antitrust Procedures and Penalties Act, the legislation requires a waiting period of at least 60 days from when regulators reach a settlement with companies regarding merger activities. Reports say the 1974 law is meant to allow a judge extra time to scrutinize the deal.

But that waiting period is rarely observed. Reuters found that 18 merger settlements were filed by the DOJ since January 2011 and that, on average, the waiting period lasted 12 days until the deals officially closed.

The data were obtained through filings with the US Securities and Exchange Commission, as well as statements offered by the companies involved.

The DOJ defends companies’ decision to not observe the 60 day waiting period, however, arguing that such a long period of inactivity could financially harm the merging companies. Further, according to Jones Day partner Joe Sims – a representative of American Airlines – the Tunney Act doesn’t not legally bar companies from finalizing their transaction within the 60-day period. It does, however, bar a judge from making a ruling on the settlement reached within that time frame.

Tunney’s effect on the American Airlines, US Airways Merger

According to reports, the 60-day waiting period officially began on November 12 for American Airlines and US Airways, when the DOJ reached a settlement with the companies over their proposed merger.

While the companies merged on December 9, leading to a new marking campaign for American Airlines Group, announced new benefits from their integrated flight plans and other actions taken to consummate the transaction, a judge still had not ruled on whether the merger was legal.

Now, US District Judge Colleen Kollar-Kotelly, who oversaw the lawsuit filed by the DOJ against the airline merger, has invited the public to comment on the merger during the waiting period. The DOJ is set to file any modifications to the settlement by Monday, according to reports.

While the judge could theoretically reject the settlement reached, reports say that outcome is unlikely. What’s more, reports say even if the settlement is rejected, the action taken by the new American Airlines Group may make any settlement rejection too late.

Critics say the growing irrelevance of the Tunney Act is yet another example of weakening US policy aimed at combating the influence of corporations on the government.

Full Content: Reuters

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.