American's Fare Was Fair
Tough competitor or predator? American Airlines convinced a federal court jury on Aug. 10 that it wasn't the bad guy after all. Jurors cleared the carrier of charges that it tried to use a simplified pricing scheme and a half-off fare sale last summer to drive two rivals out of business.
American ultimately abandoned its "value pricing" in the face of millions of dollars in losses of its own. But Continental and Northwest were seeking $1 billion in damages, which would have been tripled under antitrust law. Both say they're considering an appeal, but the case only reinforces the notion that predatory pricing is nearly impossible to prove. In the face of high-profile lawyers and arcane economic theory, the Galveston (Tex.) jury returned its verdict in less than three hours." This verdict will be very discouraging to future predatory-pricing cases," predicts Garret Rasmussen, a lawyer for cigarette maker Brooke Group in an unsuccessful antitrust case against Brown & Williamson Tobacco.
EDITED BY KEITH H. HAMMONDS