Sens. Mike Lee (R-UT), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT) sent a letter to Transportation Department Secretary Foxx and Attorney General Loretta Lynch urging them to investigate the potential anti-competitive implications of comments made by Lufthansa CEO Carsten Spohr.
Original Title
Lufthansa LeSens. Lee, Klobuchar, Blumenthal Send Letter to DOJ, DOT About Airline Surchargestter
Sens. Mike Lee (R-UT), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT) sent a letter to Transportation Department Secretary Foxx and Attorney General Loretta Lynch urging them to investigate the potential anti-competitive implications of comments made by Lufthansa CEO Carsten Spohr.
Sens. Mike Lee (R-UT), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT) sent a letter to Transportation Department Secretary Foxx and Attorney General Loretta Lynch urging them to investigate the potential anti-competitive implications of comments made by Lufthansa CEO Carsten Spohr.
Mike
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Wnited States Senate
WASHINGTON, Dc 20510
The Honorable Anthony Foxx
Secretary
U.S. Department of Transportation
1200 New Jersey Ave. SE
Washington, D.C. 20590
The Honorable Loretta Lynch
Attorney General
USS. Department of Justice
950 Pennsylvania Ave. NW
Washington, D.C. 20530
June 7, 2016
Dear Secretary Foxx and Attomey General Lynch,
We write to you to express our concerns regarding competition in the commercial air
transportation industry. Specifically, we are concerned about issues raised by Lufthansa CEO
Carsten Spohr’s participation in the “CEO Insight” panel at the June, 2015 International Air
‘Transport Association (IATA) conference in Miami, Florida."
On June 8, 2015, ata panel of the IATA conference with more than 100 executives from
competing airlines in the audience, Mr. Spohr announced that Lufthansa was planning to impose
an $18 surcharge on price-comparison websites. The panel moderator asked, “If the others don’t
follow and you end up being on your own with this fee, will you have shot yourself in the foot?"
Mr. Spohr replied, “Well, then I will ask [another airline] to buy me,” and the questioner joked,
“You'll have no value.” The other CEOs on the panel indicated that they agreed with Lufthansa’
surcharging plan, with one “commend[ing]” it as “a brave step.” During an investor call on July
30, 2015, Lufthansa’s CFO said, “What we are hearing from the industry is that other airlines
view this as very promising... . I's a first step and I believe others will follow.” Indeed, when
airline executives in the audience were asked whether they would follow Lufthansa, 96 of 118
respondents said they “might make a similar move.”
As you know, your agencies share competition and antitrust enforcement authority in this area.
The Department of J . which enforces the Sherman Act, has the ability to prosecute
anticompetitive conduct, such as collusion, price signaling, monopolization and attempted
monopolization. Lufthansa’s public statements at the ATA conference may have encouraged
competitors collectively representing the vast majority of the market to follow Lufthansa’s lead
in raising prices. Although no other carrier has publically followed Lufthansa, the Department of
" http:shwww.jata.org/events/agm/201S/pages/ceo-forum.aspx.Justice should determine what other steps, ifany, Lufthansa took, what reaction occurred, and
‘whether those actions run afoul of the Sherman Act.
If no agreement was reached, Lufthansa may have engaged in an invitation to collude, which
could be an unfair method of competition. The Department of Transportation has authority to
police “unfair method|s] of competition” by air carriers, foreign air carriers, and ticket agent
This statutory authority is similar to Section 5 of the Federal Trade Commission Act, which
makes illegal “unfair methods of competition.”* The Federal Trade Commission has interpreted
Section 5 of the FTC Act to prohibit invitations to collude" and has found reason to believe that
an invitation to collude has occurred based on public statements.” Based on the facts in the public
record, it appears that Mr. Spohr may have engaged in an invitation to collude.
‘As we mentioned above, we are concerned by Mr. Spohr’s comments last summer. We urge you
both to thoroughly investigate this matter and, if you find that there has been a violation, to
address it with an appropriate remedy.
‘Thank you for your attention to this matter.
Sincerely,
Senator Mike Lee, Chairman Senator Mmy Klobuchar, Ranking Member
Subcommittee on Antitrust, Subcommittee on Antitrust,
Competition Policy, and Consumer Rights Competition Policy, and Consumer Rights
Comer
Senator Richard Blumenthal
Subcommittee on Antitrust,
‘Competition Policy, and Consumer Rights
249 USC. § 417120.
P15 USC. § 45(a).
* See,e.g.,1n the Maiter of Drug Testing Compliance Group, LLC, httpsiliwww-fte govienforcementicases-
proceedings/151-0048/drug-testing-complianee-group-lle-matte.
* See, e.g, Inthe Mauter of Valassis Communication, htps://vww.fee.gov/enforeementicases-
‘proceedings/0S10008/valassis-communications-ine-matter.