In May, we discussed two antitrust lawsuits brought against JetBlue Airways Corporation (“JetBlue”) by the U.S. Department of Justice (“DOJ”) in the District of Massachusetts. One lawsuit is focused on JetBlue’s proposed acquisition of Spirit Airlines, Inc. (“Spirit”), while the other concerns JetBlue’s Northeast Alliance (“NEA”) with American Airlines Group, Inc. (“American”). The latter lawsuit went to trial in Fall 2022, and on May 19, 2023, Judge Leo T. Sorokin issued his Findings of Fact and Conclusions of Law (the "Opinion") in favor of the DOJ. In the Opinion, the court permanently enjoined JetBlue and American from continuing the NEA and instructed the parties to submit proposed orders regarding the text of the permanent injunction.

On July 5, 2023, JetBlue announced that it “strongly disagree[d]” with the court’s ruling against the NEA but that it had “made the difficult decision not to appeal … and has instead initiated the termination of the NEA, beginning a wind down process that will take place over the coming months.” JetBlue also stated that it will “now turn even more focus to [its] proposed combination with Spirit[.]” On July 10, the court ordered the parties to provide their positions regarding what, if any, impact the NEA’s termination has on the final injunction and judgment in the case. The parties did so, and on July 28, the court issued its Final Judgment and Order Entering Permanent Injunction.

In its May 19 Opinion, the court analyzed the NEA using the rule of reason and concluded that it violated Section 1 of the Sherman Act. To begin, the court held that the DOJ had proven that the NEA has already caused actual harm to competition. Specifically, the court found that the NEA “eliminated the once vigorous competition between two of the four largest domestic carriers in the northeast, replacing it with broad cooperation in pursuit of the shared interests of the[] partnership.” Opinion at 67-68. The court also determined that through the NEA, JetBlue had weakened its status as a “maverick” in the industry. Moreover, the court explained that JetBlue and American’s assignment of routes between themselves was a “straightforward example of market allocation” that “closely resembles a restraint that is per se illegal[.]” Id. at 73.

The court held that the DOJ had also proven that the NEA threatens substantial and imminent harm to competition. In its analysis, the court found that the relevant product and geographic markets to consider were scheduled air passenger service and the origin-destination pairs in which JetBlue and American compete (or would likely compete without the NEA), respectively. Based on the relative market shares of the defendants and business records from before the NEA, the court concluded that JetBlue and American have the power to influence prices and that they “wield this power in a highly concentrated market with significant barriers to entry.” Id. at 77.

The court also found that JetBlue and American had not produced substantial evidence of the procompetitive benefits they claim arise from the NEA, including the creation of a larger NEA network with better connectivity, as well as the creation of better schedules by allocating various routes between themselves. In fact, the court held that the “overarching purpose of the NEA is anticompetitive.” Id. at 83. Finally, the court concluded that there are less restrictive agreements that could have been put in place by JetBlue and American to achieve the same objectives of the NEA.