Sabre is prepared to fight a Department of Justice antitrust
lawsuit that attempts to block its $360 million acquisition of Farelogix.
In the action filed Tuesday in U.S. District Court in
Delaware, the DOJ asserts that the transaction is anti-competitive and would
hurt airlines and travelers, calling it "a dominant firm's attempt to
eliminate a disruptive competitor after years of trying to stamp it out."
Sabre contends that the acquisition is pro-competitive and
that it will ultimately succeed in acquiring the technology company. In a
statement released shortly after the antitrust action was filed, the company
said the claims made by the DOJ "lack a basis in reality and reflect a
fundamental misunderstanding of the industry."
The DOJ's lawsuit followed an Aug. 14 Sabre announcement
that, lacking a ruling from Justice following a "lengthy and exhaustive"
review of the transaction by the department, it intended to close the deal on
In its action, the DOJ argues that Sabre is the "dominant
provider of booking services in the United States" but has for years
resisted innovation. Farelogix has provided innovation in the space in recent
years, the department argues, something Sabre has fought against but ultimately
decided to neutralize through an acquisition.
The lawsuit includes several instances of communications
from Farelogix and Sabre executives indicating the acquisition would enable
Sabre to remove a competitor from the industry.
Brett Snyder, who runs the aviation blog Cranky Flier,
characterized the acquisition as one that would help Sabre better its offerings
for airlines and, in turn, travel agencies.
"It feels like Sabre has finally, after years of
neglecting the trends of the airline industry -- of how they want to sell
tickets -- new management has finally come in and said, 'We need to compete in
this space, or we're going to be left behind,'" Snyder said. "This
acquisition helps them do that. In my mind, it doesn't seem like an effort to
simply kill a competitor. It seems like an effort for Sabre to catch up to what
it fought against for so many years."
Industry analyst Henry Harteveldt, founder of Atmosphere
Research Group, called the lawsuit surprising and "just patently
"This is literally a waste of taxpayer money for the
DOJ to pursue this," Harteveldt said.
He contended that the DOJ is looking at the issue from the
standpoint of distribution, but distribution is not Farelogix's focus.
"What Farelogix brings to Sabre is an ability for Sabre
to be a better retailer," he said. "Farelogix doesn't operate a
[passenger service system], and Farelogix really hasn't positioned itself as a
distribution company in a long time. It's part of what they do, but it's no
longer all of what they do. They are much more focused on their innovation and
product development in areas such as online retailing."
Sabre appears to view the lawsuit in a similar manner. In
its statement, the company said the DOJ's filing claims Sabre and Farelogix are
competing "head to head" for airline bookings in the U.S. But in
reality, Sabre said, the two offer "complementary services."
"This transaction is the continuation of an already
successful collaboration between the two companies," Sabre said. "The
airline technology sector is highly competitive, with many companies -- even
airlines themselves -- competing to deliver next-gen retailing solutions. Sabre
looks forward to showing the court how dynamic this industry is and having
airlines and travel agencies explain how the industry actually works."
The termination date of the acquisition agreement between
Farelogix and Sabre has been extended to April 30, 2020. Sabre said it will
file a formal response to the DOJ's lawsuit "at the appropriate time."