A federal judge has refused to grant Sabre a new trial, after a Manhattan jury found in December that the company’s contracts harmed competition.
In an opinion and order on 21 March, Judge Lorna Schofield of the US District Court for the Southern District of New York said plaintiff US Airways had presented sufficient evidence during the proceedings for a reasonable jury to conclude it had defined the proper relevant antitrust market.
US Airways sued Sabre in 2011 for allegedly inflating commissions for bookings made through the ticketing agency. The carrier merged with American Airlines in 2013.
After an eight-week trial, a Manhattan federal jury on 20 December found that Sabre violated federal antitrust law in a 2011 contract with the airline; the company has been ordered to pay approximately $15.3 million in trebled damages.
The airline had argued that the market – global distribution system services linking airlines with traditional travel agents – was one-sided. In a motion for judgment as a matter of law or a new trial, Sabre argued in January that the market is actually two-sided.
The US Court of Appeals for the Second Circuit held in US v American Express that markets are two-sided when “interdependency that causes price changes on one side can result in demand changes on the other side.”
While Sabre and the other GDSs are two-sided platforms, Judge Schofield wrote in her opinion, “the evidence was sufficient for the jury to conclude that the relevant product market was not two-sided and interdependent, such that benefits to the travel agent side of the market had to be considered in assessing harm to competition.”
“The economic concept of two-sided platforms or markets is not the same as the legal concept of the relevant market in antitrust law, a distinction that economists and lawyers alike recognise,” Judge Schofield said.
“The vocabulary of two-sidedness is new, but courts have long addressed claims and developed case law involving businesses now recognised as two-sided platforms by closely examining the competitive realities of the market.”
A Sabre spokesperson said the court’s ruling does not alter its plans to appeal against the jury verdict. American Airlines said it is pleased with the court’s decision.
In a separate order, Judge Schofield denied US Airlines’ request for the court to clarify the jury verdict, saying that declaratory judgment is inappropriate in this case.
“US Airways has argued no intervening change of controlling law, availability of new evidence, or need to correct clear error or prevent manifest injustice that would warrant reconsideration,” Judge Schofield wrote.
In proposed amicus briefs filed in March, multiple airlines supported US Airways’ motion so that issues over the company’s contract restrictions would not need to be relitigated.
A Sabre spokesperson said in a statement that the company “is pleased that the court rejected US Airways’ request to reinstate a claim for declaratory relief, which the court properly dismissed 18 months ago.”
Counsel to US Airways
O’Melveny & Myers
Partner Charles Diamond in Los Angeles and Andrew Frackman in New York
Counsel to Sabre Corporation
Cleary Gottlieb Steen & Hamilton
Partners George Cary in Washington, DC, and Lev Dassin in New York are assisted by Steven Kaiser, Kenneth Reinker, Bradley Justus and Carl Malm
Gibson Dunn & Crutcher
Partner Joseph Kattan in Washington, DC
Barlit Beck Herman Palenchar & Scott
Chris Lind and Andrew MacNally in Chicago and Karma Giulianelli and Sean Grimsley in Denver