The Department of Justice (DOJ) on Tuesday filed a lawsuit to block Sabre's $360 million acquisition of Farelogix, calling the acquisition "a dominant firm's attempt to eliminate a disruptive competitor after years of trying to stamp it out."

Sabre said it will challenge the lawsuit and remains confident that the acquisition will be completed.

In the lawsuit, filed in U.S. District Court in Delaware, the DOJ argued that if the acquisition were to go through, it would eliminate competition that has benefitted airlines and consumers.

"If allowed to proceed, the acquisition would likely result in higher prices, reduced quality, and less innovation for airlines and, ultimately, traveling American consumers," said Makan Delrahim, assistant attorney general of the DOJ's Antitrust Division.

Just last week, Sabre said it intended to close the Farelogix acquisition on Aug. 21. Sabre said it was "confident in the legal and competitive merits of the acquisition and that the transaction will ultimately be completed."

In its lawsuit, the DOJ argues that Sabre and its GDS peers have "thwarted attempts by new, innovative competitors such as Farelogix to inject much-needed competition into this industry." It states that Farelogix, an "innovator," is a threat to Sabre's dominance as the largest GDS in the U.S. as it offers a solution, Open Connect, that enables agencies to bypass GDSs and connect directly with travel agencies.

The DOJ also argues that Farelogix has been a leader in IATA's New Distribution Capability (NDC), which Sabre had resisted.

The lawsuit alleges Sabre has attempted to "box Farelogix out of the industry" for years, but Farelogix has been able to grow its customer base, making it "a greater threat to Sabre than ever before."

As a result, the DOJ alleges Sabre wants to eliminate the competition by acquiring Farelogix.

The lawsuit asks the court to find the acquisition in violation of the law and ban the proposed acquisition and any other transactions between the two that would combine Sabre and Farelogix assets or business.

In a statement, Sabre said, "The DOJ's claims lack a basis in reality and reflect a fundamental misunderstanding of the industry."

Sabre said the DOJ "misstates Farelogix's role in the industry," and the two companies "offer complementary services."

Sabre president and CEO Sean Menke pointed to several commitments it has made since it announced the acquisition: that Farelogix products would be offered at the same or lower prices for a period of time after the acquisition, and any existing Sabre GDS or Farelogix Open Connect contracts would be extended on the same terms (including price) for at least three years.

"These commitments underscore that Sabre's goal in acquiring Farelogix is to strengthen our ability to provide our airline and agency customers with the next-generation retailing, distribution, and fulfillment products and services they need," Menke said in a statement.

Sabre said it will file a formal response with the court.


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