THE US Department of Justice (DOJ) has filed a civil antitrust lawsuit to block the US$360 million (R5,4 billion) Sabre acquisition of Farelogix.
The DOJ says Sabre is the largest booking services provider in the US and that the acquisition will eliminate a disruptive competitor, leading to higher prices as well as reduced quality and innovation in airline booking services. Farelogix is a US-based company that allows airlines to dynamically price and personalise air and ancillary offers and to transact airline offers across channels via a certified NDC API.
The DOJ has been reviewing the transaction since its announcement last year. The court papers state that the firms compete head-to-head to provide booking services to airlines, including offering IT solutions that allow airlines to sell tickets and ancillary products through traditional travel agencies.
“The acquisition will eliminate competition that has substantially benefited airlines and consumers,” says the DOJ.
The suit argues that airlines have successfully leveraged their ability to turn to Farelogix to negotiate lower fees with Sabre and the other GDSs and to reduce their reliance on GDSs for booking services.
The complaint also argues that Sabre’s attempt to acquire Farelogix follows many other attempts by Sabre to neutralise its competitor. Last year, Farelogix’s ceo told European antitrust authorities that Sabre and the other two major GDSs “continue to leverage significant market power to preserve their market position and stifle innovation”.
Sabre has said it will challenge the lawsuit, arguing that the DOJ’s claims reflect a fundamental misunderstanding of the industry. It adds that the transaction will bring needed scale and investment to Farelogix and enable it to accelerate the delivery of the industry’s first end-to-end NDC-enabled solution for the retailing, distribution and fulfilment of travel.
Sabre had previously committed to its airline customers and the DOJ that, for a period of time after the transaction, it would continue to offer Farelogix products at the same prices available today or lower, and to support and invest in those products at the same level or higher. Sabre has also committed to extend any existing Sabre GDS or Farelogix Open Connect contracts on the same terms, including price, for a period of at least three years.
