Relaxing whilst doing Competition Law is not an Oxymoron

Archive for December 14th, 2009

We Can’t Talk about Pricing…

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Skimming through some US antitrust cases I came across an interesting passage that I confess I’d never read before (it’s one of those ‘smoking gun’ sort of things that somehow always catches our eye). This is an unaltered excerpt of the 5th Circuit’s Opinion in US v. American Airlines 743 F2d 1114 United States v. American Airlines Inc L

“For some time before February 1982, American and Braniff were competing fiercely for passengers flying to, from and through Dallas Fort Worth, by offering lower fares and better service. During a telephone conversation between Robert Crandall, American’s president, and Howard Putnam, Braniff’s president, the following exchange occurred:

Crandall: I think it’s dumb as hell for Christ’s sake, all right, to sit here and pound the * * * * out of each other and neither one of us making a * * * * * * * dime.

Putnam: Well– Crandall: I mean, you know, goddamn, what the * * * * is the point of it?

Putnam: Nobody asked American to serve Harlingen. Nobody asked American to serve Kansas City, and there were low fares in there, you know, before. So–

Crandall: You better believe it, Howard. But, you, you, you know, the complex is here–ain’t gonna change a goddamn thing, all right. We can, we can both live here and there ain’t no room for Delta. But there’s, ah, no reason that I can see, all right, to put both companies out of business.

Putnam: But if you’re going to overlay every route of American’s on top of over, on top of every route that Braniff has–I can’t just sit here and allow you to bury us without giving our best effort.

Crandall: Oh sure, but Eastern and Delta do the same thing in Atlanta and have for years.

Putnam: Do you have a suggestion for me?

Crandall: Yes. I have a suggestion for you. Raise your goddamn fares twenty percent. I’ll raise mine the next morning.

Putnam: Robert, we–

Crandall: You’ll make more money and I will too. Putnam: We can’t talk about pricing.

Crandall: Oh bull * * * *, Howard. We can talk about any goddamn thing we want to talk about.

Putnam did not raise Braniff’s fares in response to Crandall’s proposal; instead he presented the government with a tape recording of the conversation.

(Image possibly subject to copyrights: source here)

Written by Alfonso Lamadrid

14 December 2009 at 7:08 am