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Report to Congress : efforts to monitor Orbitz
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2002-06-27
[PDF-1.92 MB]
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Abstract:In spring of 2001, the Department of Transportation (DOT) conducted an informal investigation of Orbitz, the online travel agency owned by five large U.S. airlines (American Airlines, Delta Air Lines, Northwest Airlines and United Air Lines). There was a concern that Orbitz?s airline wonership and its use of a ?Most Favored Nation? (MFN) clause in agreements with airline participants could lead to a reduction in competition in the airline and airline distribution business. There was additional concern that owner carriers and other carriers participating in Orbitz could use it as a vehicle for price and/or service collusion or coordination and thereby reduce competition. While the finding was inconclusive based on Orbitz?s business and operating plans, DOT planned to monitor the impact of Orbitz?s actual operations on competition. The Congressional report on the DOT appropriations bill for fiscal year 2002 requested that the Office of Aviation and International Affairs ?report on its monitoring efforts of air travel services related to Orbitz as a ?joint airline distribution venture.? In this report, DOT addresses four primary concerns identified by the Conferees: 1) deviations from plans, policies, and procedures initially proposed in the joint venture?s business plan and contained in its charter associate agreements; 2) the extent to which the joint venture has adhered to its commitment to not bias displays of fares or services; 3) the extent to which ties between airline-owners and the ?Most Favored Nation? clause in the charter association agreement have resulted in monopolistic or other anti-competitive market behavior; and, 4) whether airline-owners of the joint ventures or charter associates have acted in an anti-competitive manner by choosing not to distribute fares through other on-line distribution outlets. DOT refrains from reaching definitive conclusions in this report because the Department of Justice has not complete its antitrust review of Orbitz. Appendix, 28 p.
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