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U.S. Loses Another Antitrust Battle as Travel Tech Deal OKed (3)

April 8, 2020, 12:43 PMUpdated: April 8, 2020, 7:26 PM

Sabre Corp. beat a Justice Department antitrust lawsuit that sought to prevent its $360 million acquisition of Farelogix Inc., as a federal court approved the travel industry deal.

Judge Leonard Stark of the U.S. District Court for the District of Delaware held in an order Tuesday that the merger can proceed despite a DOJ lawsuit that alleged the deal would drive up prices for flight booking fees.

Stark, in a redacted opinion released Wednesday, said the government failed to show how the deal would harm competition.

“While the DOJ argues that Sabre’s purchase of Farelogix will ‘reduce competition to innovate,’ the court is not persuaded,” Stark said.

The ruling is another setback for the government following its 2019 failure to block AT&T Inc.'s acquisition of Time Warner. The Sabre/Farelogix merger case, filed in August 2019, was the first the government litigated since that loss.

During a two-week bench trial, DOJ attorneys argued that the deal would allow Sabre to cement its stronghold in the airline booking services industry by eliminating Farelogix as an industry rival.

Stark said the DOJ’s decision to define the product market as the airline booking services industry was flawed as such a market doesn’t exist based on trial testimony.

“DOJ’s proposed product market is at odds with the commercial realities of the industry,” the opinion said.

Farelogix provides IT solutions that connect an airline’s internal booking system to travel agents and other third-party travel sites, while Sabre is a full-service company that connects airlines, travel agents, hotels, and car rentals with one another, the companies said during trial.

“This federal court ruling supports our view that the Sabre-Farelogix acquisition is not anti-competitive,” Kristin Hays, vice president of global communications for Sabre, said in a statement.

The government is “disappointed” with the court’s decision and will consider next steps as it reviews the judge’s opinion, Makan Delrahim, chief of the DOJ’s antitrust division, said in a statement.

The court’s merger approval is another victory for Skadden, Arps, Slate, Meagher & Flom LLP. Sabre’s lead trial attorney, Steven Sunshine, also helped secure court approval Feb. 11 for T-Mobile US Inc.'s $26.5 billion deal with Sprint Corp.

On Track

Sabre has said it’s stillcommitted to the merger with Farelogix even as the ongoing coronavirus pandemic upends the travel industry.

In response to the virus, Sabre has announced temporary pay cuts for its employees, including a 25% pay reduction for its chief executive officer. Sabre is also reducing contracting with third-party vendors and suspending its share repurchase program.

The travel deal still faces scrutiny from the U.K’s antitrust regulator, which said in February that Sabre’s acquisition of Farelogix could result in less innovation and higher fees.

A final report from the U.K.'s Competition and Markets Authority is expected “later this week,” Sabre’s Kristin Hays said.

The case is United States v. Sabre Corp., D. Del., No. 1:19-cv-01548, Order 4/7/20.

(Updated to include judge's opinion )

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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