Federal Judge Blocks Billion-Dollar Acquisition Of Spirit Airlines

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Will Kessler Contributor
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A federal judge in Boston, Massachusetts, ruled against JetBlue Airways’ acquisition of Spirit Airlines on Tuesday, citing competition concerns.

The judge, appointed by Ronald Reagan, agreed with the Department of Justice (DOJ), which argued that the $3.8 billion deal would have spurred JetBlue to raise prices following the elimination of Spirit as a competitor in the ultra-low-cost carrier market, according to court documents. The deal would have merged the 7th and 6th largest airlines and created the 5th biggest airline in the U.S., with the government claiming that the merger would have raised prices by as much as 30%, according to the Wall Street Journal. (RELATED: Boeing Could Lose Huge Foreign Client Following Alaska Air Incident: REPORT)

“We disagree with the U.S. District Court’s ruling,” JetBlue and Spirit said in a joint statement to the Daily Caller News Foundation following the decision. “We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers. JetBlue’s termination of the Northeast Alliance and commitment to significant divestitures have removed any reasonable anti-competitive concerns that the Department of Justice raised. We are reviewing the court’s decision and are evaluating our next steps as part of the legal process.”

The price of shares for Spirit sank by 56% immediately following the announcement, as investors responded to the news, according to CNN.

The DOJ filed the initial complaint on March 7, 2023, in a bid to stop further airline consolidation that has gradually been occurring in the industry over the past several years. Through the suit, the DOJ is seeking to preserve what is referred to as the “Spirit Effect,” where prices from all carriers are lowered when Spirit is operating in a market.

“As our complaint alleges, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers, with the greatest impact felt by those who rely on what are known as ultra-low-cost carriers in order to fly,” Merrick Garland, U.S. Attorney General, said in a press release following the initial filing. “Companies in every industry should understand by now that this Justice Department will not hesitate to enforce our antitrust laws and protect American consumers.”

The rejection of the acquisition is one of a number of antitrust decisions under the Biden administration, including a ruling in December against Google, with a jury finding that the tech giant used its monopoly to engage in anticompetitive practices on its app store.

The DOJ did not immediately respond to a request to comment from the DCNF.

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