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
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
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
"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.