The Department of Justice has found the proposed settlement with
Lufthansa Airlines in agents’ landmark suit against the major
carriers raises “serious concerns under antitrust laws.”
In a letter filed with the court and sent to attorneys last
week, the department asks Lufthansa and the plaintiffs to come up
with an alternate deal. The department’s concerns are the most
significant to date as the proposed settlement nears a hearing
Sept. 2 in U.S. District Court in Raleigh, N.C. The Association of
Retail Travel Agents and American Airlines also recently filed
formal objections to the settlement with the court.
The proposed Lufthansa settlement includes a bonus program that
would pay agents as much as $100 when they book with the
airline.
It also would create a mechanism for agencies that went out of
business in the last five years to file claims for underpaid
Lufthansa commissions.
In its letter, the department said the fact that the deal
includes an agreement among competing travel agents to set
commissions violates antitrust laws that stipulate competitors may
not agree on their prices.
The department said any settlement should not incorporate
agreements among travel agents to set commissions or to establish a
common commission program. “We ask that Lufthansa and plaintiffs
advise the Court that they will seek to reach an alternative
settlement that does not have these antitrust defects,” the letter
reads.
Attorney Daniel Shulman, an attorney for lead plaintiff Sarah
Futch Hall, said he received the letter from the Justice Department
late last week. Shulman said he expects the department’s concerns
will be part of the Sept. 2 hearing.
“We think that is so out to lunch, it’s ridiculous,” he said.
American filed its own objections with the court recently, arguing
that the Lufthansa deal would constitute a joint action with travel
agents to “reinstitute a commission model that the competitive
marketplace ended” and would unfairly influence agents to steer
business to Lufthansa.
John Hawks, ARTA president, said he was surprised to hear of the
department’s concerns.
ARTA’s attorney, Alexander Anolik, said last Wednesday that he
had heard about the department’s letter but had not yet seen it.
“ARTA was right that there were problems, but not for the same
reasons,” Anolik said.
ARTA filed formal objections to the deal opposing several
specific points including minimum sales thresholds in the second
and third years of the three-year deal.
