This report summarizes reported antitrust decisions in 2003 that involved transportation companies. It updates the TLA Antitrust and Unfair Practices Committee report issued in April 2003 that included antitrust related transportation decisions for 2002.^**

Midwestern Machinery Co., Inc. v. Northwest Airlines, 2003-1 Trade Cases ¶ 73,950, 2003 U.S. Dist. LEXIS 1827 (No. 97-1438; D.Minn. Feb. 5, 2003).

In this case, the U.S. District Court for the District of Minnesota held that a suit alleging that an airline merger had violated section 7 of the Clayton Act (15 U.S.C. § 18) was barred by the statute of limitations. The plaintiff alleged, in a complaint that had been filed in 1987, that the 1986 merger of Northwest Airlines and Republic Airlines resulted in a substantial lessening of competition. The court held that a four-year statute of limitations applied, and that the statute ran from the date of the merger, and not each consumer’s subsequent purchase of a ticket. This case has been appealed to the U.S. Court of Appeals for the Eighth Circuit (No. 03-1664).

United States v. AMR Corp., 335 F.3d 1109, 2003-2 Trade Cases ¶ 74,078 (No. 01-3202; 10th Cir. July 3, 2003).

In this case, the U.S. Court of Appeals for the Tenth Circuit held that American Airlines had not engaged in attempted monopolization through alleged predatory pricing in violation of section 2 of the Sherman Act (15 U.S.C. § 2). The United States maintained that American had priced routes connected to its Dallas/Ft. Worth hub below cost, with the intent to recoup the costs once it had excluded competition in those markets. The court held that the United States as an initial matter had failed to show that American had priced below cost, because American had not on any of the routes set prices below its average variable cost.

In re US Airways Group, Inc., 296 B.R. 673, 2003-2 Trade Cases ¶ 74,131 (No. 03-827-A; E.D.Va., Aug. 13, 2003).

In this case, the U.S. District Court for the Eastern District of Virginia held that claims that a bankrupt airline had ceased paying travel agent commissions as part of an conspiracy in violation of section 1 of the Sherman Act (15 U.S.C. § 1) could be resolved by the bankruptcy court and did not require reference to Federal district court. The travel agents alleged that the relevant statute governing bankruptcy proceedings required that their claims be considered by a Federal District court. The court held that the claims could be considered by the bankruptcy court, because they did not require the consideration of substantive principles of antitrust law.

Hall v. United Air Lines, Inc., 2003-2 Trade Cases ¶ 74,218, 2003 U.S. Dist. LEXIS 20537 (No. 00-123; E.D.N.C. Oct. 30, 2003).

In this case, the U.S. District Court for the Eastern District of North Carolina held that a class action alleging that airlines had conspired to cease paying travel agent commissions should be dismissed for lack of evidence. The plaintiffs alleged that U.S. and foreign airlines conspired, over a period of years, to reduce the commissions paid on the sale of tickets from 10% to zero, in violation of section 1 of the Sherman Act (15 U.S.C. § 1). The court held that the evidence was circumstantial, and that the airlines had presented overwhelming evidence that the cuts were as likely the result of competitive conduct and natural changes in the market. This case has been appealed to the U.S. Court of Appeals for the Fourth Circuit (Nos. 03-2387 and 03-2388).

Atlantic Coast Airlines Holdings, Inc. v. Mesa Air Group, Inc., 2003-2 Trade Cases ¶ 74,238, 2003 U.S. Dist. LEXIS 22792 (No. 03-2198; D.D.C. Dec. 18, 2003).

In this case, the U.S. District Court for the District of Columbia enjoined Mesa Air from proceeding with a solicitation to replace ACA’s board of directors. ACA alleged that Mesa Air had violated section 1 of the Sherman Act (15 U.S.C. § 1) and section 7 of the Clayton Act (15 U.S.C. § 18) by conspiring with United Air Lines in its effort to takeover ACA (which planned to transform itself from a regional affiliate of United to a low-fare mainline airline), as well as that Mesa Air had violated various securities laws. The court held that ACA sufficiently had alleged a violation of section 1 of the Sherman Act (but not of section 7 of the Clayton Act or the securities laws) to support the issuance of an injunction. This case has been appealed to the U.S. Court of Appeals for the District of Columbia Circuit (No. 04-7011).

South Coast Cab Co., Inc v. LaRochelle, 2003-1 Trade Cases ¶ 74,010, 2003 Cal. App. Unpub. LEXIS 3841 (No. G030079; Calif. Ct. App. 4th April 17, 2003).

In this case, the California Court of Appeal, Fourth District, held that two municipal employees were immune from suit under Federal antitrust law. The plaintiff alleged that the employees had overseen a permit system that had denied it the right to operate. The court held that federal law (15 U.S.C. § 35(a)) explicitly immunized municipalities and employees acting in their official capacities from antitrust damage claims, and that there was no evidence that the employees – city code enforcement officers – had acted in anything but their official capacity.

Fine Airport Parking, Inc. v. City of Tulsa, 2003 OK 27, 71 P.3d 5, 2003-1 Trade Cases ¶ 73,977 (No. 96748; Okla. Mar. 11, 2003).

In this case, the Oklahoma Supreme Court held that the City of Tulsa was not immune from suit under Oklahoma antitrust law based upon the doctrine of state action immunity, but that the city had not violated Oklahoma antitrust law. The plaintiff alleged that Tulsa had excluded competition for airport parking by setting and maintaining on-airport parking prices with an unreasonably low profit expectation. The court held that an antitrust suit against a municipality did not raise the same federalism issues as a suit against a state, and therefore that Tulsa was not immune. But because Tulsa had been authorized by another Oklahoma law to regulate airport parking, the court held that it could not violate Oklahoma antitrust law, even if its regulation had anti-competitive effects.

Leopoldo Fontanillas, Inc. v. Luis Ayala Colon Sucesores, Inc.., 283 F. Supp.2d 579, 2004-1 Trade Cases ¶ 74,276 (No. 02-2835; D.P.R. Sept. 24, 2003).

In this case, the U.S. District Court for the District of Puerto Rico dismissed most of a commercial maritime agent’s allegations that the defendants (including a cement company, a municipal port, and another agent) had attempted to monopolize the commercial maritime agency business in the Port of Ponce, in violation of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1-2), section 4 of the Clayton Act (15 U.S.C. § 15), and Puerto Rican antitrust law. The court noted numerous flaws in the claims, including that the cement company implausibly was alleged to have engaged in a conspiracy that would have increased its costs, that the state action exemption is applicable to the port, and that there were no specific allegations of a written or oral agreement among the defendants. However, the court held that the other commercial maritime agent had engaged in predatory pricing could proceed.

Fisherman’s Wharf Bay Cruise Corp. v. Blue and Gold Fleet, Inc., 114 Cal. App. 4th 309, 7 Cal. Rptr. 3d 628, 2004-1 Trade Cases ¶ 74,248 (No. A101652; Calif. Ct. App. 1st Dec. 15, 2003).

In this case, the California Court of Appeal, First District, held that a sightseeing cruise operator could sue a competitor under California antitrust law for predatory pricing and price discrimination. The plaintiff alleged that Blue and Gold Fleet had tried to drive it out of business by selling tickets below cost to wholesale purchasers of sightseeing cruises, paying secret rebates to wholesalers, and entering into tying arrangements for Alcatraz tickets, among other practices. The court held that the plaintiff stated a claim under California law even if Blue and Gold Fleet had offered only some tickets below cost, and had offered secret rebates on only some tickets, but that California’s prohibition of tying applied only to commodities and not to services. This case has been appealed to the California Supreme Court (No. S122176).

The U.S. Department of Justice has obtained multiple indictments concerning an alleged international cartel to allocate customers, rig bids, and fix prices on parcel tanker (i.e., bulk liquid) freight contracts in violation of section 1 of the Sherman Act (15 U.S.C. § 1). On June 24, 2003, charges were filed against Richard B. Wingfield, the former managing director of Tanker Trading for Stolt-Nielsen Transportation Group Ltd. On September 29, 2003, the DOJ announced that Odjfell Seachem A.S. of Norway and two of its executives had agreed to plead guilty and to cooperate with the investigation. Odjfell Seachem agreed to pay a $42.5 million fine; Bjorn Sjaastad, CEO of its parent company, Odjfell A.S.A., agreed to pay a $250,000 fine and serve four months in prison; and Erik Nilsen, Vice President, agreed to pay a $25,000 fine and serve three months in prison. On December 8, 2003, the DOJ announced that Hendrikus van Westenbrugge, a former co-managing director of JO Tankers B.V. also had agreed to plead guilty and to cooperate with the investigation. Van Westenbrugge agreed to pay a $75,000 fine and serve three months in prison.

The U.S. Department of Justice also has brought a criminal action against a Belgian moving and storage company. Gosselin World Wide Moving N.V. has been charged with participating in a conspiracy to raise the rates charged to the U.S. Department of Defense to move the household goods of DOD employees from Germany to the United States in violation of section 1 of the Sherman Act (15 U.S.C. § 1). On October 8, 2003, charges were filed against Gosselin and its managing director, Marc Smet, who was arrested in Honolulu, Hawaii on October 14, 2003. A grand jury indicted both Gosselin and Smet on November