OST-97-2058 / American Airlines and British Airways / Antitrust Immunity / Petition of American Airlines / September 19, 1997
Joint Application of:
AMERICAN AIRLINES, INC. and BRITISH AIRWAYS PLC
under 49 USC Sections 41308 and 41309 for approval of and antitrust immunity for alliance agreement
PETITION OF AMERICAN AIRLINES, INC.
FOR RECONSIDERATION OF ORDER 97-9-4
American Airlines, Inc. hereby petitions for reconsideration of Order 97-9-4, September 5, 1997, insofar as that order requires American to file certain extremely sensitive documents identified for in camera review in our submissions of March 31, 1997 and July 25, 1997.
American is eager to gain approval of its proposed alliance with British Airways. To that end, we are this day filing 63 documents (listed in Attachment 1), which will be available for review by counsel and outside experts under the Department's confidentiality affidavit procedure. We are taking this action despite our conviction that these documents are not relevant to the public interest issues in this proceeding, and despite our misgivings about making them available to our competitors.
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With respect to the remaining documents (listed in Attachment 2), American seeks reconsideration of Order 97-9-4, and urges the Department to vacate the requirement that these documents be filed. In light of the vast and unprecedented amount of evidence that the applicants have already submitted, there is no basis whatever for interested parties to contend that they have not had ample opportunity to analyze, and take positions on, the AA/BA alliance.
The documents which American seeks to withhold fall into several categories:
(1) Division of benefits between American and British Airways, or analyses of the arrangement that would enable such benefits to be calculated;
(2) Internal valuation of the alliance under various regulatory scenarios;
(3) American's future codesharing or alliance initiatives with other airlines;
(4) Potential sources of London/Heathrow slots and slot valuations;
(5) Frequent flyer analyses, including those showing potential diversion of traffic between American and British Airways;
(6) Traffic and revenue projections based on proprietary analytical tools;
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(7) Analyses of potential alternatives to a fully immunized American/British Airways alliance; and
(8) Attorney/client privilege.
None of this material is relevant to the ability of any interested party to participate fully in this proceeding. There is no reason for American's competitors to know anything about the applicants' internal deliberations and projections on benefit sharing, or the applicants' valuation of the alliance. Nor is there any reason for American to tell its competitors about its strategic plans for alliances with other carriers; in the event such plans come to fruition and require regulatory approval, interested parties will have the opportunity to make their views known at the appropriate time.
With respect to potential sources of London/Heathrow slots and slot valuations, our competitors are fully capable of presenting their own analyses, and many have already done so in presentations to the Department; in subcommittee hearings in the Senate and House; at the Office of Fair Trading in London; and at the European Commission in Brussels.
Frequent flyer analyses by the parties are clearly irrelevant to the issues in this case. The Department has deemed such material irrelevant in other immunity proceedings, and should follow those precedents here. See, egg, Delta/
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Swissair/Sabena/Austrian, Order 95-11-5, November 3, 1995, p. 6; American/Canadian, Order 96-1-6, January 11, 1996, p. 4.
The applicants should not be required to submit traffic and revenue projections based on proprietary analytical tools. Neither the analytical tools nor the conclusions derived from them are relevant, since commenting parties are fully capable to preparing and presenting their own forecasts.
Finally, it is not appropriate to require the applicants to file documents that deal with potential alternative arrangements between American and British Airways in the event that the proposed alliance is not approved. There is no legitimate reason for competitors to have information about matters that have not been presented to the Department and that are not at issue. In the event that such alternative proposals are ever finalized and require regulatory approval, American and British Airways will seek whatever authority is needed, and interested parties will be able to submit their views.
The American/British Airways proposal was announced on June 11, 1996, and the joint application for approval and immunity has been pending since January 10, 1997. American and British Airways have already submitted far more material than the Department has ever required in similar proceedings. Interested parties have had months to study these thousands of pages of material, including hundreds of confidential documents
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made available under the affidavit procedure. As noted above, the applicants have appeared before Congress, the OFT in London, and the EC in Brussels. At this point, the world knows far more about the proposed AA/BA transaction, which is not yet in effect, than it knows about any of the alliances already in operation. Moreover, American's competitors know far more about both the alliance and American's other business plans than American knows about theirs.
The Department's affidavit procedure does not provide adequate confidentiality, and is clearly being abused by some parties. As shown in Attachment 3, some 83 people have filed affidavits in this proceeding as attorneys or outside experts for 13 interested parties. Some competitors have enlisted as many as a dozen individuals to peruse the documents submitted -- far more than are needed for the limited purpose of filing comments in this proceeding. Some competitors have gone so far as to have high-ranking executives who are attorneys, but do not normally function as such or appear as regulatory counsel in DOT proceedings, file affidavits. Others have had outside attorneys, who never appear in DOT proceedings but serve as litigation counsel in lawsuits that such competitors are pursuing against the applicants, file affidavits.
Certain competitors have even entered into consortium arrangements for the apparent purpose of obtaining, and shar-
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ing, what amount to verbatim copies of the applicants' confidential documents. In visits to our offices, affidavit holders for various parties have spent many days reading into recording devices or keying into laptop computers, for the apparent purpose of producing, and pooling, what are actual transcriptions of documents supposedly being held confidential. In light of these abuses, American and British Airways simply cannot file the documents for which we again seek in camera treatment.
CONCLUSION
American urges the Department to reconsider Order 979-4 with respect to the documents listed in Attachment 2 and to vacate the requirement that such documents be submitted in the docket. These documents are competitively very sensitive, are not relevant to the issues in this proceeding, and cannot be made available to our competitors.
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Respectfully submitted,
CARL B. NELSON, JR.
Associate General Counsel American Airlines, Inc.
GARY R. DOERNHOEFER
Senior Attorney American Airlines, Inc.
September 19, 1997