Continental, United merger contested in federal court
Continental Airlines Inc.'s merger with UAL Corp., approved by shareholders Sept. 17, should be blocked because the combination would create a monopoly, a lawyer representing consumers argued in federal court.
The attorney, Joseph Alioto, and Katherine B. Forrest, a lawyer representing Houston-based Continental and Chicago-based United, presented final arguments in the antitrust case before U.S. District Judge Richard Seeborg in San Francisco.
To temporarily block the merger and then contest it at a trial, Alioto must convince Seeborg that the acquisition substantially reduces competition or creates a monopoly.
"In the U.S. we happen to believe in competition rather than combination," Alioto told Seeborg. Arguments presenting potentially reduced service at Cleveland's airport, for example, and potential price increases must demonstrate a "threatened" and not necessarily certain injury to consumers to block the deal, Alioto said. The challenge "at least deserves a trial on the merits," Alioto said.
Shareholders of UAL and Continental approved Sept. 17 the $3.22 billion all-stock merger that was announced in May and is scheduled to close by Oct. 1. The airlines received regulatory approval from the Justice Department in July to merge, creating an airline company surpassing Delta Air Lines Inc. as the world's biggest.
Forrest said Alioto hasn't presented evidence sufficient to block the merger. She told Seeborg that Ohio Attorney General Richard Cordray closed an investigation of the merger and that the companies have been promised that a similar inquiry in California will be closed.
Seeborg said he will rule before Oct. 1.
The case is Malaney v. UAL Corp., 10-2858, U.S. District Court, Northern District of California (San Francisco).
<div class="infoBox">
<h1>More Coverage</h1>
<div class="infoBoxContent">
<div class="infoArea">
<h2>Stories</h2>
<ul class="links">
<li><a href="/story/?id=409322">United, Continental fliers to see merger changes start in 2011 <span class="date">[09/20/10]</span></a></li>
<li><a href="/story/?id=408803">Shareholders OK Continental, UAL merger to create largest airline <span class="date">[09/17/10]</span></a></li>
</ul>
</div>
</div>
</div>