The District Court of Delaware ruled in favor of the merger of Sabre and Farelogix in a Justice Department antitrust case. Judge Leonard P. Stark said in his partially redacted opinion that the United States did not present enough evidence to prove the acquisition among the two airline booking companies would substantially lessen competition. “Based on the evidence, the Court predicts that the merger of Sabre and Farelogix will not increase prices nor deter innovation, even though it may reduce one source of airlines’ leverage in negotiating with GDSs,” the opinion states.
The United States filed the complaint against Sabre Corporation, Sabre GLBL Inc., Farelogix Inc., and Sandler Capital Partners, in August of 2019. The Plaintiff claimed Sabre’s acquisition of Farelogix was an attempt to eliminate a competitor. Sabre is represented by Skadden, Arps, Slate, Meagher & Flom and Farelogix is represented by Paul, Weiss, Rifkind, Wharton & Garrison.
“This federal court ruling supports our view that the Sabre-Farelogix acquisition is not anti-competitive. We appreciate the consideration the court gave to these important issues,” said Kristin Hays, vice president of global communications for Sabre, after the decision was given in their favor. Sabre agreed to purchase Farelogix in November of 2018 for $360 million. Hays said they are waiting on a decision from the UK Competition and Markets Authority on the merger and they previously expressed concerns about the lack of competition the merger could cause.
The opinion says Sabre has controlled about 50 percent of airline bookings through travel agents in the United States through their global distribution system, however, it also says there are other aspects providing competition including airlines’ direct distribution channels, travel agencies, and online booking services. It also says that Farelogix has been a successful competitor and will likely create value for Sabre.
The opinion also claims that “most of the players in the airline travel ecosystem” supported the merger of Sabre and Farelogix, although it also says a few like American Airlines and United Airlines have interests against the merger; both have previously attempted to acquire Farelogix.
The opinion states “the Court recognizes that the outcome here may strike some, including the litigants, as somewhat odd,” because in several of the points discussed in the trial the court was more persuaded by the Department of Justice than by the defendants. It says this is due largely to the lack of credibility of certain defense witnesses, but re-stated that the defendants won the case because the burden of proof was not met by the Department of Justice. “Defendants opted to tell the Court a story that is not adequately supported by the facts, but it was their choice whether to do so, and their failing does not determine the outcome of this case. Instead, it is DOJ which, under the law, has the obligation to prove its contention that the Sabre-Farelogix transaction will harm competition in a relevant product and geographic market. DOJ failed,” Judge Stark said.