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 Aug. 21. 

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 ridiculous."

"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."


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