US sues to block JetBlue-Spirit merger, citing competition concerns

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The Department of Justice said it would try to block JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines, launching a lawsuit to stave off further consolidation of the airline industry.

The merger that would have created the fifth-largest airline in the U.S., but the move to block it marks a sharp turn from past precedent in which the government has approved mergers such as American-US Airways, United-Continental, Delta-Northwest and Southwest-AirTran.

JetBlue and Spirit argued that they needed to merge in order to compete against the four largest U.S. airlines — Delta Air Lines, American, United and Southwest Airlines — which already dominate about 80% of the U.S. market.

However, the DOJ didn’t buy the argument.

The DOJ said it believed that a merger between JetBlue and Spirit would ultimately cause fares to increase, since a combined airline would have fewer seats and wouldn’t be able to fully recover from its losses without charging more for airfare.

President Joe Biden’s administration has adopted a hawkish stance on antitrust laws, with the DOJ aggressively suing to block mergers between major companies. For example, a judge blocked a merger between publishing giants Simon and Schuster and Penguin Random House after the DOJ filed a lawsuit. The DOJ is also planning to sue Adobe and Figma over their $20 billion merger.

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The DOJ is currently attempting to hamper a partnership between JetBlue and American Airlines in Boston and New York, known as the Northeast Alliance. A decision on that partnership is also expected to be released in the near future.

This is a breaking news story. Stay tuned for more updates.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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