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United-Continental Airlines Merger Approved by Justice Dept.

By Tanya Roth, Esq. on August 31, 2010 6:58 AM

Congratulations, it's a merger, or very nearly. The Justice Department announced on August 27 that it has approved the Continental and United Airlines merger. Late last Friday, the DOJ completed its anti-trust review of the merger with the addition of some final details. One specific addition was the agreement to lease landing and take-off rights at Newark Liberty International to Southwest to increase competition at that airport. Currently, United and Continental together offer 442 daily flights at Newark.

According to the report by USAToday, Continental CEO Jeff Smisek, who has been named to run the new company under the name United, said the lease of Newark slots to Southwest is "a fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top quality products and services, while enhancing domestic competition at Newark."

The leasing of the slots to the discount carrier addresses the concerns the DOJ has had over the market share of the newly merged carriers in the New York area. The Los Angeles Times reports the move will now allow Continental and United to complete the merger without the type of extended investigation that stymied United's attempt to acquire US Airways ten years ago.

The Times writes that the antitrust regulators had been expected to present the strongest challenge to the latest arilines merger, which will create one of the world's largest airlines. For example, the Times points to the DOJ critics of a 2009 decision by Transportation Secretary Ray LaHood to grant antitrust immunity to carriers to set prices on North Atlantic flights with Star Alliance partners Air Canada and Lufthansa.

According to the Times, the merger must still be approved by the Transportation Department, as well as shareholders of United and Continental. The shareholders are expected to vote on the $8 billion merger on September 17.

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