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Orbitz Antitrust Inquiry Dropped

August 01, 2003|From Associated Press

The Justice Department announced Thursday that it was closing its antitrust investigation of the Orbitz online travel service after finding no evidence that the company stifled competition.

R. Hewitt Pate, assistant attorney general for the antitrust division, said investigators concluded that Orbitz would not trigger higher air fares, nor would it become the dominant method of online airline ticket distribution.

"After an extensive investigation of the available facts, the antitrust division concluded that the Orbitz joint venture has not reduced competition or harmed airline consumers," Pate said.

Orbitz was started in June 2001 by the five largest U.S. air carriers: American, United, Continental, Delta and Northwest. Later, 40 foreign and domestic airlines became "charter associates" of the venture, with Southwest, Jet Blue, Air Tran and ATA the largest airlines not taking part.

Internet sales represent about 15% of airline tickets sold in the United States, the Justice Department said. And the cheaper fares online have put competitive pressure on travel agents.

The Justice Department concluded that the Orbitz joint venture has not resulted in fewer discount fares being made available to the flying public and that air carriers continue to compete fiercely on their own Internet sites for customers.

In addition, low-cost carriers such as Southwest and Jet Blue that are not involved in Orbitz "exert pressure on Orbitz owners and charter associates to offer more competitive fares," the Justice Department said. "Rival sites have continued to grow in airline ticket revenues and other revenues."

The investigation found that Orbitz grew quickly after it was launched and then leveled off, selling about a quarter of online tickets as of December 2002, the Transportation Department said.

Competitors, among them Travelocity and Expedia Inc., are competing with Orbitz and have access to numerous Internet-only fares, the investigation found.

Orbitz has also been the subject of lawsuits filed by travel agents who contend that the service has undercut their commissions and steered consumers toward the cheaper fares available on the Internet.

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