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112-401: Modern GDSs typically also allow users to book hotel rooms, rental cars, airline tickets as well as other activities and tours. They also provide access to railway reservations and bus reservations in some markets, although these are not always integrated with the main system. These are also used to relay computerized information for users in the hotel industry, making reservation and ensuring that

224-794: A felony .... Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony .... Federal judges quickly began struggling with the broad wording of the Sherman Act, recognizing that interpreting it literally could make even simple business associations such as partnerships illegal. They began developing principles for distinguishing between "naked" trade restraints between rivals that suppressed competition and other restraints that were merely "ancillary" to cooperation agreements that promoted competition. The Sherman Act gave

336-403: A felony , and, on conviction thereof, shall be punished by fine not exceeding $ 100,000,000 if a corporation , or, if any other person, $ 1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. — Sherman Act 1890 § 1 Preventing collusion and cartels that act in restraint of trade is an essential task of antitrust law. It reflects

448-578: A free market . In this deregulated environment, the ARS and its descendants became vital to the travel industry. Airline reservation system: All you need to know United States antitrust law In the United States , antitrust law is a collection of mostly federal laws that govern the conduct and organization of businesses in order to promote economic competition and prevent unjustified monopolies . The three main U.S. antitrust statutes are

560-780: A central clearing house for U.S. travel; other airlines demurred, citing fear that United States antitrust law may have been breached. In 1976, United Airlines began offering its Apollo system to travel agents; while it would not allow the agents to book tickets on United's competitors, the marketing value of the convenient terminal proved indispensable. SABRE, PARS, and DATAS were soon released to travel agents as well. Following airline deregulation in 1978, an efficient CRS proved particularly important; by some counts, Texas Air executive Frank Lorenzo purchased money-losing Eastern Air Lines specifically to gain control of its SystemOne CRS. Also in 1976 Videcom international with British Airways , British Caledonian and CCL launched Travicom ,

672-569: A clear precedent, to which the situation is analogous, proof of an anti-competitive effect is more difficult. The reason for this is that the courts have endeavoured to draw a line between practices that restrain trade in a "good" compared to a "bad" way. In the first case, United States v. Trans-Missouri Freight Association , the Supreme Court found that railroad companies had acted unlawfully by setting up an organisation to fix transport prices. The railroads had protested that their intention

784-503: A consortium led by Air France and West Germany's Lufthansa developed Amadeus , modeled on SystemOne. Amadeus Global Travel Distribution was launched in 1992. In 1990, Delta, Northwest Airlines , and Trans World Airlines formed Worldspan , and in 1993, another consortium (including British Airways, KLM, and United Airlines , among others) formed the competing company Galileo GDS based on Apollo. Numerous smaller companies such as KIU have also formed, aimed at niche markets not catered for by

896-543: A database of reservations (or passenger name records) and of tickets issued (if applicable). ARSs are part of passenger service systems (PSS), which are applications supporting the direct contact with the passenger. ARS eventually evolved into the computer reservations system (CRS). A computer reservation system is used for the reservations of a particular airline and interfaces with a global distribution system (GDS) which supports travel agencies and other distribution channels in making reservations for most major airlines in

1008-404: A flight departs, the so-called passenger name list (PNL) is handed over to the departure control system that is used to check-in passengers and baggage. Reservation data such as the number of booked passengers and special service requests is also transferred to flight operations systems, crew management and catering systems. Once a flight has departed, the reservation system is updated with a list of

1120-513: A lesser extent in the European Union , the modern law governing monopolies and economic competition is known by its original name — "antitrust law". The term "antitrust" came from late 19th-century American industrialists ' practice of using trusts —legal arrangements where one is given ownership of property to hold solely for another's benefit—to consolidate separate companies into large conglomerates. These " corporate trusts " died out in

1232-445: A monopoly in any line of commerce. — Clayton Act 1914 §3 In theory predatory pricing happens when large companies with huge cash reserves and large lines of credit stifle competition by selling their products and services at a loss for a time, to force their smaller competitors out of business. With no competition, they are then free to consolidate control of the industry and charge whatever prices they wish. At this point, there

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1344-534: A monopoly. The FTC and the Justice Department both have the authority to file lawsuits seeking to block or invalidate unlawful mergers. The FTC may challenge a merger in its own administrative court instead of filing a lawsuit in a United States district court , although defendants can appeal the FTC's decisions to one of the United States courts of appeals . In addition to the FTC and the Justice Department,

1456-552: A monopoly. Third, Section 2 of the Sherman Act prohibits monopolization. Federal antitrust laws provide for both civil and criminal enforcement. Civil antitrust enforcement occurs through lawsuits filed by the Federal Trade Commission (FTC), the Antitrust Division of the U.S. Department of Justice , and private parties who have been harmed by an antitrust violation. Criminal antitrust enforcement

1568-467: A number of exemptions. Mergers and joint agreements of professional football, hockey, baseball, and basketball leagues are exempt. Major League Baseball was held to be broadly exempt from antitrust law in the Supreme Court case Federal Baseball Club v. National League . The court unanimously held that the baseball league's organization meant that there was no commerce between the states taking place, even though teams traveled across state lines to put on

1680-410: A one letter code. The meaning of these codes are not often known by the passenger, but conveys information to airline staff, for example they may indicate that a ticket was fully paid, or discounted or purchased through a loyalty scheme, etc. Some seats may not be available for open sale, but reserved for example for connecting flight or loyalty scheme passengers. Overbooking is also a common practice, and

1792-443: A party must wait 30 days while the FTC or the Justice Department reviews the merger and decides whether to seek to block it. The 30-day period usually ends with the FTC or Justice Department taking one of three actions: declining to challenge the merger, filing a lawsuit to challenge the merger, or issuing a "Second Request" that extends the waiting period and formally asks the party for all its documents and other information relating to

1904-478: A permanent optimization of the offered booking classes in response to changes in demand or pricing strategies of competitors. Users access an airline's inventory through an availability display. It contains all offered flights for a particular city-pair with their available seats in the different booking classes. This display contains flights which are operated by the airline itself as well as code share flights which are operated in co-operation with another airline. If

2016-550: A private party may also file a lawsuit under the Clayton Act if an unlawful merger has injured its ability to compete for business. Under the Hart–Scott–Rodino (HSR) Act of 1976 , any party wanting to execute a merger or acquisition must report it in advance to the FTC and the Justice Department, unless the sizes of the transaction and the parties executing it are both below certain thresholds. After filing its HSR report,

2128-610: A proposed merger was illegal even though the resulting company would have controlled only five percent of the relevant market. In a now-famous line from his dissent in the 1966 decision United States v. Von's Grocery Co. , Supreme Court justice Potter Stewart remarked: "The sole consistency that I can find [in U.S. merger law] is that in litigation under [the Clayton Act], the Government always wins." The "structuralist" interpretation of U.S. antitrust law began losing favor in

2240-500: A resolution to move to 100% electronic ticketing. So far, the industry has not been able to comply due to various technological and international limitations. The industry is at 98% electronic ticket issuance today, although electronic processing for MCOs was not available in time for the IATA mandate. American Airlines and Teleregister Company developed a number of automated airline booking systems known as Reservisor . it first version

2352-417: A senior IBM sales representative, on a flight from Los Angeles to New York . C.R. invited Blair to visit their Reservisor system and look for ways that IBM could improve the system. Blair alerted Thomas Watson Jr. that American was interested in a major collaboration, and a series of low-level studies started. Their idea of an automated airline reservation system (ARS) resulted in a 1959 venture known as

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2464-509: A single system. Airline reservation systems incorporate airline schedules, fare tariffs , passenger reservations and ticket records. An airline's direct distribution works within their own reservation system, as well as pushing out information to the GDS. The second type of direct distribution channel are consumers who use the internet or mobile applications to make their own reservations. Travel agencies and other indirect distribution channels access

2576-416: A small number of competitors or oligopolists , have led to significant controversy over whether or not antitrust authorities should intervene. Fourth, vertical agreements between a business and a supplier or purchaser "up" or " downstream " raise concerns about the exercise of market power , however they are generally subject to a more relaxed standard under the "rule of reason". Some practices are deemed by

2688-582: A so-called passenger name record (PNR). Among other data, the PNR contains personal information such as name, contact information or special services requests (SSRs) e.g. for a vegetarian meal, as well as the flights (segments) and issued tickets. Some reservation systems also allow to store customer data in profiles to avoid data re-entry each time a new reservation is made for a known passenger. In addition, most systems have interfaces to CRM systems or customer loyalty applications (aka frequent traveler systems). Before

2800-495: A train were vacant or reserved to accelerate searches of and updates to seat patterns, for communications with terminals, printing reservation notices, and CRT displays. In 1953 Trans-Canada Airlines (TCA) started investigating a computer-based system with remote terminals , testing one design on the University of Toronto 's Ferranti Mark 1 machine that summer. Though successful, the researchers found that input and output

2912-420: Is a cartel . It is irrelevant whether or not the businesses succeed in increasing their profits, or whether together they reach the level of having market power as might a monopoly . Such collusion is illegal per se . Bid rigging is a form of price fixing and market allocation that involves an agreement in which one party of a group of bidders will be designated to win the bid. Geographic market allocation

3024-426: Is also little motivation for investing in further technological research, since there are no competitors left to gain an advantage over. High barriers to entry such as large upfront investment, notably named sunk costs , requirements in infrastructure and exclusive agreements with distributors, customers, and wholesalers ensure that it will be difficult for any new competitors to enter the market, and that if any do,

3136-411: Is an agreement between competitors not to compete within each other's geographic territories. If an antitrust claim does not fall within a per se illegal category, the plaintiff must show the conduct causes harm in "restraint of trade" under the Sherman Act §1 according to "the facts peculiar to the business to which the restraint is applied". This essentially means that unless a plaintiff can point to

3248-671: Is an exception to inventory management principles. One of the core functions of inventory management is inventory control. Inventory control monitors how many seats are available in the different fare classes, and by opening and closing individual fare classes for sale. A flight schedule management system forms the foundation of the inventory management system. Besides other functions, it is critical for ticket sales, crew member assignments, aircraft maintenance, airport coordination, and connections to partner airlines. The schedule system monitors what and when aircraft will be available on particular routes, and their internal configuration. Inventory data

3360-419: Is called a fare basis code . There are two systems set up for the interchange of fares data — ATPCO and SITA, plus some system to system direct connects. This system distributes the fare tariffs and rule sets to all GDSs and other subscribers. Every airline employs staff who code air fare rules in accordance with yield management intent. There are also revenue managers who watch fares as they are filed into

3472-688: Is done only by the Justice Department's Antitrust Division. Additionally, U.S. state governments may also enforce their own antitrust laws, which mostly mirror federal antitrust laws, regarding commerce occurring solely within their own state's borders. The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated. Some economists argue that antitrust laws actually impede competition, and may discourage businesses from pursuing activities that would be beneficial to society. One view suggests that antitrust laws should focus solely on

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3584-511: Is imported and maintained from the schedule distribution system. Changes to aircraft availability would immediately impact the available seats of the fleet, as well as the seats which had been sold. The price for each sold seat is determined by a combination of the fares and booking conditions stored in the Fare Quote System,. In most cases, inventory control has a real time interface to an airline's yield management system to support

3696-580: Is in the process of moving into a partition within the Worldspan complex, and Topas agencies will be migrating into Amadeus. Reservation systems may host "ticket-less" airlines and "hybrid" airlines that use e-ticketing in addition to ticket-less to accommodate code-shares and interlines . In addition to these "standardized" GDS, some airlines have proprietary versions which they use to run their flight operations. A few examples are Delta's OSS and Deltamatic systems and EDS SHARES. SITA Reservations remains

3808-509: The Apollo Reservation System and Programmed Airline Reservation System (PARS), respectively. Soon, travel agents began pushing for a system that could automate their side of the process by accessing the various ARSes directly to make reservations. Fearful this would place too much power in the hands of agents, American Airlines executive Robert Crandall proposed creating an industry-wide computer reservation system to be

3920-466: The Attorney General , to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of

4032-403: The Federal Trade Commission , can bring civil lawsuits enforcing the laws. The United States Department of Justice alone may bring criminal antitrust suits under federal antitrust laws. Perhaps the most famous antitrust enforcement actions brought by the federal government were the break-up of AT&T's local telephone service monopoly in the early 1980s and its actions against Microsoft in

4144-527: The GTE Sylvania Court ruled that non-price vertical restrictions in contracts were no longer per se illegal and should be analyzed under the rule of reason. Overall, the Supreme Court's antitrust rulings during this era on collusion cases under section 1 of the Sherman Act reflected tension between the older "absolutist" approach and the newer Chicago endorsing the rule of reason and economic analysis. The Justice Department and FTC lost most of

4256-466: The Netscape browser. In 2000, the trial court ordered Microsoft to split in two, preventing it from future misbehavior. Microsoft appealed to the U.S. Court of Appeals for the D.C. Circuit , which affirmed in part and reversed in part. In addition, it removed the judge from the case for discussing the case with the media while it was still pending. With the case in front of a new judge, Microsoft and

4368-622: The Noerr-Pennington doctrine . Also, regulations by states may be immune under the Parker immunity doctrine . Fourth, the government may grant monopolies in certain industries such as utilities and infrastructure where multiple players are seen as unfeasible or impractical. Fifth, insurance is allowed limited antitrust exemptions as provided by the McCarran-Ferguson Act of 1945. Sixth, M&A transactions in

4480-525: The Progressive Era prompted public officials to increase enforcement of antitrust laws. The Justice Department sued 45 companies under the Sherman Act during the presidency of Theodore Roosevelt (1901–09) and 90 companies during the presidency of William Howard Taft (1909–13). In 1911, the U.S. Supreme Court reframed U.S. antitrust law as a " rule of reason " in its landmark decision Standard Oil Co. of New Jersey v. United States . At trial,

4592-513: The Railway Technical Research Institute , with the system eventually being produced by Hitachi in 1958. It was the world's first seat reservation system for trains. The MARS-1 was capable of reserving seat positions, and was controlled by a transistor computer with a central processing unit and a 400,000-bit magnetic drum memory unit to hold seating files. It used many registers , to indicate whether seats in

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4704-569: The Sabre (Semi-Automated Business Research Environment) using IBM hardware. Sabre's breakthrough was its ability to keep inventory correct in real time, accessible to agents around the world. The deregulation of the airline industry, in the Airline Deregulation Act , meant that airlines, which had previously operated under government-set fares ensuring airlines at least broke even, now needed to improve efficiency to compete in

4816-709: The Semi-Automatic Business Research Environment (SABRE), launched the following year. By the time the network was completed in December 1964, it was the largest civil data processing system in the world. Other airlines established their own systems. Pan Am launched its PANAMAC system in 1964. Delta Air Lines launched the Delta Automated Travel Account System (DATAS) in 1968. United Airlines and Trans World Airlines followed in 1971 with

4928-754: The Sherman Act 1890 §7, these may be trebled, a measure to encourage private litigation to enforce the laws and act as a deterrent. The courts may award penalties under §§1 and 2, which are measured according to the size of the company or the business. In their inherent jurisdiction to prevent violations in future, the courts have additionally exercised the power to break up businesses into competing parts under different owners, although this remedy has rarely been exercised (examples include Standard Oil , Northern Securities Company , American Tobacco Company , AT&T Corporation and, although reversed on appeal, Microsoft ). Three levels of enforcement come from

5040-604: The Sherman Act of 1890 , the Clayton Act of 1914 , and the Federal Trade Commission Act of 1914 . These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels , and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create

5152-558: The associationalist view that close collaboration among business leaders and government officials could efficiently guide the economy. Some Americans abandoned faith in free market competition entirely after the Wall Street Crash of 1929 . Advocates of these views championed the passage of the National Industrial Recovery Act of 1933 and the centralized economic planning experiments during

5264-562: The Apollo, Worldspan and Galileo systems), Sabre , InteliSys Aviation (which owns amelia RES PSS) and Shares. There is one major Regional GDS, Abacus, serving the Asian market and a number of regional players serving single countries, including Travelsky (China), ORS (Russia), Infini and Axess (both Japan) and Topas (South Korea). Of these, Infini is hosted within the Sabre complex, Axess

5376-729: The Federal Trade Commission (FTC) as an independent agency that has shared jurisdiction with the Justice Department over federal civil antitrust enforcement and has the power to prohibit "unfair methods of competition". Despite the passage of the Clayton Act and the FTC Act, U.S. antitrust enforcement was not aggressive between the mid-1910s and the 1930s. Based on their experience with the War Industries Board during World War I , many American economists, government officials, and business leaders adopted

5488-634: The Federal government, primarily through the Department of Justice and the Federal Trade Commission, the governments of states, and private parties. Public enforcement of antitrust laws is seen as important, given the cost, complexity and daunting task for private parties to bring litigation, particularly against large corporations. The federal government, via both the Antitrust Division of the United States Department of Justice and

5600-477: The Justice Department had successfully argued that American petroleum conglomerate Standard Oil had violated the Sherman Act by building a monopoly in the oil refining industry through economic threats against competitors and secret rebate deals with railroads. On appeal, the Supreme Court affirmed the trial court's verdict, holding that Standard Oil's high market share was proof of its monopoly power and ordering it to break itself up into 34 separate companies. At

5712-622: The Justice Department's Antitrust Division , which had been established in 1919. This intellectual shift influenced American courts to abandon their acceptance of sector-wide cooperation among companies. Instead, American antitrust jurisprudence began following strict "structuralist" rules that focused on markets' structures and their levels of concentration . Judges usually gave little credence to defendant companies' attempts to justify their conduct using economic efficiencies , even when they were supported by economic data and analysis. In its 1940 decision United States v. Socony-Vacuum Oil Co. ,

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5824-570: The NFL as a "cartel" of 32 independent businesses subject to antitrust law, not a single entity. Third, antitrust laws are modified where they are perceived to encroach upon the media and free speech, or are not strong enough. Newspapers under joint operating agreements are allowed limited antitrust immunity under the Newspaper Preservation Act of 1970 . More generally, and partly because of concerns about media cross-ownership in

5936-452: The Sherman Act outlawed "monopoliz[ation]" and "every contract, combination ... or conspiracy in restraint of trade". Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of

6048-483: The Sherman Act. American courts were even stricter when hearing merger challenges under the Clayton Act during this era, due in part to Congress's passage of the Celler-Kefauver Act of 1950 , which banned consolidation of companies' stock or assets even in situations that did not produce market dominance. For example, in its 1962 decision Brown Shoe Co. v. United States , the Supreme Court ruled that

6160-935: The Sherman and Clayton Acts. Much of their economic analysis involved game theory , which showed that some conduct that had been thought uniformly anticompetitive, such as preemptive capacity expansion, could be either pro- or anticompetitive depending on the circumstances. The writings of Yale Law School professor Robert Bork and University of Chicago Law School professors Richard Posner and Frank Easterbrook , who all later became prominent federal appellate judges, translated Chicago economists' analytical advances into legal principles that judges could readily apply. Pointing out that economic analysis showed that some previously condemned practices were actually procompetitive and had economic benefits that outweighed their dangers, they argued that many antitrust bright-line per se rules of illegality were unwarranted and should be replaced by

6272-782: The Supreme Court refused to apply the rule of reason to an agreement between oil refiners to buy up surplus gasoline from independent refining companies. It ruled that price-fixing agreements between competing companies were illegal per se under section 1 of the Sherman Act and would be treated as crimes even if the companies claimed to be merely recreating past government planning schemes. The Court began applying per se illegality to other business practices such as tying , group boycotts , market allocation agreements, exclusive territory agreements for sales, and vertical restraints limiting retailers to geographic areas. Courts also became more willing to find that dominant companies' business practices constituted illegal monopolization under section 2 of

6384-507: The Supreme Court's 1974 decision United States v. General Dynamics Corp. , the federal government lost a merger challenge at the Supreme Court for the first time in over 25 years. In 1999 a coalition of 19 states and the federal Justice Department sued Microsoft . A highly publicized trial in the U.S. District Court for the District of Columbia found that Microsoft had strong-armed many companies in an attempt to prevent competition from

6496-550: The Supreme Court's decision in Standard Oil represented an effort by conservative federal judges to "soften" the Sherman Act and narrow its scope. Congress reacted in 1914 by passing two new laws: the Clayton Act, which outlawed using mergers and acquisitions to achieve monopolies and created an antitrust law exemption for collective bargaining ; and the Federal Trade Commission Act, which created

6608-472: The U.S. Department of Justice the authority to enforce it, but the U.S. presidents and U.S. Attorneys General in power during the 1890s and early 1900s showed relatively little interest in doing so. With little interest in enforcing the Sherman Act and courts interpreting it relatively narrowly, a wave of large industrial mergers swept the United States in the late 1890s and early 1900s. The rise of

6720-625: The UK. It allowed agents and airlines to communicate via a common distribution language and network, handling 97% of UK airline business trade bookings by 1987. The system went on to be replicated by Videcom in other areas of the world including the Middle East (DMARS), New Zealand, Kuwait (KMARS), Ireland, Caribbean, United States and Hong Kong. Travicom was a trading name for Travel Automation Services Ltd. When British Airways (who by then owned 100% of Travel Automation Services Ltd) chose to participate in

6832-730: The United States , regulation of media is subject to specific statutes, chiefly the Communications Act of 1934 and the Telecommunications Act of 1996 , under the guidance of the Federal Communications Commission . The historical policy has been to use the state's licensing powers over the airwaves to promote plurality. Antitrust laws do not prevent companies from using the legal system or political process to attempt to reduce competition. Most of these activities are considered legal under

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6944-428: The benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest. Surveys of American Economic Association members since the 1970s have shown that professional economists generally agree with the statement: "Antitrust laws should be enforced vigorously." In the United States and Canada , and to

7056-474: The case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. — Sherman Act 1890 § 4 The remedies for violations of U.S. antitrust laws are as broad as any equitable remedy that a court has the power to make, as well as being able to impose penalties. When private parties have suffered an actionable loss, they may claim compensation. Under

7168-407: The checked-in passengers (e.g. passengers who had a reservation but did not check in (no shows) and passengers who checked in, but did not have a reservation (go shows)). Finally, data needed for revenue accounting and reporting is handed over to administrative systems. The Fares data store contains fare tariffs, rule sets, routing maps, class of service tables, and some tax information that construct

7280-423: The city pair is not one on which the airline offers service, it may display a connection using its own flights or display the flights of other airlines. The availability of seats of other airlines is updated through standard industry interfaces. Depending on the type of co-operation, it supports access to the last seat (last seat availability) in real-time. Reservations for individual passengers or groups are stored in

7392-450: The close of business at 2:00   pm each day at any price other than that day's closing price did not violate the Sherman Act. The Court said that although the rule was a restraint on trade, a comprehensive examination of the rule's purposes and effects showed that it "merely regulates, and perhaps thereby promotes competition." During the mid-1930s, confidence in the statist centralized economic planning models that had been popular in

7504-407: The condition , agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create

7616-461: The course of such commerce, to lease or make a sale or contract for sale of goods , wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on

7728-513: The court must ordinarily consider the facts peculiar to the business to which the restraint is applied, its condition before and after the restraint was imposed, the nature of the restraint, and its effect, actual or probable. Section 7 of the Clayton Act makes it illegal to execute a merger or acquisition if the effect "may be substantially to lessen competition, or to tend to create a monopoly." No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly,

7840-401: The courts to be so obviously detrimental that they are categorized as being automatically unlawful, or illegal per se . The simplest and central case of this is price fixing . This involves an agreement by businesses to set the price or consideration of a good or service which they buy or sell from others at a specific level. If the agreement is durable, the general term for these businesses

7952-411: The decisions of a single enterprise, or a single economic entity, even though the form of an entity may be two or more separate legal persons or companies. In Copperweld Corp. v. Independence Tube Corp. it was held an agreement between a parent company and a wholly owned subsidiary could not be subject to antitrust law, because the decision took place within a single economic entity. This reflects

8064-464: The defense sector are often subject to greater antitrust scrutiny from the Department of Justice and the Federal Trade Commission . The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1 to 7 of this title; and it shall be the duty of the several United States attorneys, in their respective districts, under the direction of

8176-522: The development of the Galileo system Travicom changed its trading name to Galileo UK and a migration process was put in place to move agencies from Travicom to Galileo. European airlines also began to invest in the field in the 1980s initially by deploying their own reservation systems in their homeland, propelled by growth in demand for travel as well as technological advances which allowed GDSes to offer ever-increasing services and searching power. In 1987,

8288-443: The discretion of the court. — Sherman Act 1890 §2 The law's treatment of monopolies is potentially the strongest in the field of antitrust law. Judicial remedies can force large organizations to be broken up, subject them to positive obligations , impose massive penalties, and/or sentence implicated employees to jail. Under Section 2 of the Sherman Act, every "person who shall monopolize, or attempt to monopolize ... any part of

8400-486: The early 1970s in the face of harsh criticism by economists and legal scholars from the University of Chicago . Scholars from the Chicago school of economics had long called for reducing price regulation and limiting barriers to entry . Newer Chicago economists like Aaron Director argued that there were economic efficiency explanations for some practices that had been condemned under the structuralist interpretation of

8512-504: The early 20th century as U.S. states passed laws that made it easier to create new corporations . In most other countries, antitrust law is now called " competition law " or "anti-monopoly law". American antitrust law formally began in 1890 with the U.S. Congress 's passage of the Sherman Antitrust Act , although a few U.S. states had passed local antitrust laws during the preceding year. Using broad and general terms,

8624-564: The early stages of the New Deal . The Supreme Court's decisions in antitrust cases during this period reflected these views, and the Court had a "largely tolerant" attitude toward collusion and cooperation between competitors. One prominent example was the 1918 decision Chicago Board of Trade v. United States , in which the Court ruled that a Chicago Board of Trade rule banning commodity brokers from buying or selling grain forwards after

8736-623: The early years of the New Deal era began to wane. At the urging of economists such as Frank Knight and Henry C. Simons , President Franklin D. Roosevelt 's economic advisors began persuading him that free market competition was the key to recovery from the Great Depression . Simons, in particular, argued for robust antitrust enforcement to “de-concentrate” American industries and promote competition. In response, Roosevelt appointed "trustbusting" lawyers like Thurman Arnold to serve in

8848-727: The four largest networks, including the low-cost carrier segment, and small and medium size domestic and regional airlines. For many years, global distribution systems (GDSs) have had a dominant position in the travel industry. To bypass the GDSs, and avoid high GDS fees, airlines have started to sell flights directly through their websites. Another way to bypass the GDSs is direct connection to travel agencies, such as that of American Airlines . ACCELaero Airline reservations system Airline reservation systems ( ARS ) are systems that allow an airline to sell their inventory (seats). It contains information on schedules and fares and contains

8960-533: The games. That travel was merely incidental to a business which took place in each state. It was subsequently held in 1952 in Toolson v. New York Yankees , and then again in 1972 Flood v. Kuhn , that the baseball league's exemption was an "aberration". However Congress had accepted it, and favored it, so retroactively overruling the exemption was no longer a matter for the courts, but the legislature. In United States v. International Boxing Club of New York , it

9072-491: The government settled, with the government dropping the case in return for Microsoft agreeing to cease many of the practices the government challenged. Every contract , combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of

9184-522: The hotel is not overbooked. Airline reservations systems may be integrated into a larger passenger service system , which also includes an airline inventory system and a departure control system . The current centralised reservation systems are vulnerable to network-wide system disruptions. The MARS-1 train ticket reservation system was designed and planned in the 1950s by the Japanese National Railways ' R&D Institute, now

9296-424: The industry to sector specific regulation (frequently done, for example, in the cases water , education , energy or health care ). The law on public services and administration goes significantly beyond the realm of antitrust law's treatment of monopolies. When enterprises are not under public ownership, and where regulation does not foreclose the application of antitrust law, two requirements must be shown for

9408-473: The integration and automation of its booking and ticketing processes. It introduced an electronic reservations system, Magnetronic Reservisor , in 1952. The first computerized booking system was the little-known Trans-Canada Air Lines (today's Air Canada ) system, ReserVec developed by Ferranti Canada . It started to be delivered in April 1961 and by January 24, 1963 completed the airline switch-over from

9520-501: The largest neutral multi-host airline reservations system, with over 100 airlines currently managing inventory. In the airline industry, available seats are commonly referred to as inventory. The inventory of an airline is generally classified into service classes (e.g. economy, premium economy, business or first class) and any number of fare classes , to which different prices and booking conditions may apply. Fare classes are complicated and vary from airline to airline, often indicated by

9632-475: The law does not seek to prohibit every kind of agreement that hinders freedom of contract , it developed a " rule of reason " where a practice might restrict trade in a way that is seen as positive or beneficial for consumers or society. Third, significant problems of proof and identification of wrongdoing arise where businesses make no overt contact, or simply share information, but appear to act in concert. Tacit collusion , particularly in concentrated markets with

9744-420: The law draws a "basic distinction between concerted and independent action". Multi-firm conduct tends to be seen as more likely than single-firm conduct to have an unambiguously negative effect and "is judged more sternly". Generally the law identifies four main categories of agreement. First, some agreements such as price fixing or sharing markets are automatically unlawful, or illegal per se . Second, because

9856-560: The manual systems. Shortly after, in 1962 another computerized reservation system began to be delivered to United Airlines which was one of the largest computer systems at that time, controlling 60 cities in a communication system that provided one second response time. Developed by Evelyn Berezin at the Teleregister Company, it was an update to the era of the transistor of its line of Reservisor systems making them now fully electronic. In 1964, American Airlines developed

9968-549: The market's closing time (and then finalise the deals when it opened the next day). The reason for the Board of Trade having this rule was to ensure that all traders had an equal chance to trade at a transparent market price. It plainly restricted trading, but the Chicago Board of Trade argued this was beneficial. Justice Brandeis, giving judgment for a unanimous Supreme Court, held the rule to be pro-competitive, and comply with

10080-481: The merger. Every person who shall monopolize , or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony , and, on conviction thereof, shall be punished by fine not exceeding $ 100,000,000 if a corporation, or, if any other person, $ 1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in

10192-413: The monopolization cases they brought under section 2 of the Sherman Act during this era. One of the government's few anti-monopoly victories was United States v. AT&T , which led to the breakup of Bell Telephone and its monopoly on U.S. telephone service in 1982. The general "trimming back" of antitrust law in the face of economic analysis also resulted in more permissive standards for mergers. In

10304-543: The offense of monopolization. First, the alleged monopolist must possess sufficient power in an accurately defined market for its products or services. Second, the monopolist must have used its power in a prohibited way. The categories of prohibited conduct are not closed, and are contested in theory. Historically they have been held to include exclusive dealing , price discrimination , refusing to supply an essential facility , product tying and predatory pricing . It shall be unlawful for any person engaged in commerce, in

10416-417: The operation of an in-house airline reservation system is relatively expensive. Prior to deregulation , airlines owned their own reservation systems with travel agents subscribing to them. Today, the GDS are run by independent companies with airlines and travel agencies being major subscribers. As of February 2009, there are only a few major GDS providers in the market: Amadeus , Travelport (which operates

10528-487: The price – "the fare". Rules like booking conditions (e.g. minimum stay, advance purchase, etc.) are tailored differently between different city pairs or zones, and assigned a class of service corresponding to its appropriate inventory bucket. Inventory control can also be manipulated manually through the availability feeds, dynamically controlling how many seats are offered for a particular price by opening and closing particular classes. The compiled set of fare conditions

10640-417: The public tariffs and make competitive recommendations. Inventory control is typically manipulated from here, using availability feeds to open and close classes of service. The role of the ticketing complex is to issue and store electronic ticket records and the very small number of paper tickets that are still issued. Miscellaneous charges order (MCO) is still a paper document; IATA has working groups defining

10752-407: The replacement document the electronic multipurpose document (EMD) as at 2010. The electronic ticket information is stored in a database containing the data that historically was printed on a paper ticket including items such as the ticket number, the fare and tax components of the ticket price or exchange rate information. In the past, airlines issued paper tickets; since 2008, IATA has been supporting

10864-458: The rule of reason. Judges increasingly accepted their ideas from the mid-1970s on, motivated in part by the United States' declining economic dominance amidst the 1973–1975 recession and rising competition from East Asian and European countries. The "pivotal event" in this shift was the Supreme Court's 1977 decision Continental Television, Inc. v. GTE Sylvania, Inc . In a decision that prominently cited Chicago school of economics scholarship,

10976-417: The rule of reason. It did not violate the Sherman Act §1. As he put it, Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question,

11088-614: The same GDS as those accessed by the airline reservation systems, and all messaging is transmitted by a standardized messaging system that functions on two types of messaging that transmit on SITA's high level network (HLN). These messaging types are called Type A [usually EDIFACT format] for real time interactive communication and Type B [TTY] for informational and booking type of messages. Message construction standards set by IATA and ICAO, are global, and apply to more than air transportation. Since airline reservation systems are business critical applications, and they are functionally quite complex,

11200-471: The same time, however, the Court also held that although the Sherman Act prohibited "every" restraint of trade, it actually banned only those that were "unreasonable". It ruled that the Sherman Act was to be interpreted as a "rule of reason" under which the legality of most business practices would be evaluated on a case-by-case basis according to their effect on competition, with only the most egregious practices being illegal per se . Many observers thought

11312-479: The theory of predatory pricing ). Antitrust laws do not apply to, or are modified in, several specific categories of enterprise (including sports, media, utilities, health care , insurance , banks , and financial markets ) and for several kinds of actor (such as employees or consumers taking collective action ). First, since the Clayton Act 1914 §6, there is no application of antitrust laws to agreements between employees to form or act in labor unions . This

11424-426: The trade or commerce among the several States" commits an offence. The courts have interpreted this to mean that monopoly is not unlawful per se , but only if acquired through prohibited conduct. Historically, where the ability of judicial remedies to combat market power have ended, the legislature of states or the Federal government have still intervened by taking public ownership of an enterprise, or subjecting

11536-399: The trust will have ample advance warning and time in which to either buy the competitor out, or engage in its own research and return to predatory pricing long enough to force the competitor out of business. Critics argue that the empirical evidence shows that "predatory pricing" does not work in practice and is better defeated by a truly free market than by antitrust laws (see Criticism of

11648-441: The view that each business has a duty to act independently on the market, and so earn its profits solely by providing better priced and quality products than its competitors. The Sherman Act §1 prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." This targets two or more distinct enterprises acting together in a way that harms third parties. It does not capture

11760-474: The view that if the enterprise (as an economic entity) has not acquired a monopoly position, or has significant market power , then no harm is done. The same rationale has been extended to joint ventures , where corporate shareholders make a decision through a new company they form. In Texaco Inc. v. Dagher the Supreme Court held unanimously that a price set by a joint venture between Texaco and Shell Oil did not count as making an unlawful agreement. Thus

11872-458: The whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create

11984-480: The world's first multi-access reservations system (wholly based on Videcom technology), forming a network providing distribution for initially two and subsequently 49 subscribing international airlines (including British Airways, British Caledonian, Trans World Airlines , Pan Am , Qantas , Singapore Airlines , Air France , Lufthansa , Scandinavian Airlines System , Air Canada , KLM , Alitalia , Cathay Pacific and Japan Airlines ) to thousands of travel agents in

12096-611: Was a major problem. Ferranti Canada became involved in the project and suggested a new system using punched cards and a transistorized computer in place of the unreliable tube -based Mark I. The resulting system, ReserVec , started operation in 1962, and took over all booking operations in January 1963. Terminals were placed in all of TCA's ticketing offices, allowing all queries and bookings to complete in about one second with no remote operators needed. In 1953 American Airlines CEO C. R. Smith chanced to sit next to R. Blair Smith,

12208-612: Was an electromechanical version of the flight boards introduced for the "sell and report" system that was installed in American's Boston reservation office in February 1946. These simple vacuum tube and electromechanical computers were based on telephone switching systems made by Teleregister. In the late 1950s, the American Airles wanted a system that would allow real-time access to flight details in all of its offices, and

12320-711: Was held that, unlike baseball, boxing was not exempt, and in Radovich v. National Football League (NFL) , professional football is generally subject to antitrust laws. As a result of the AFL-NFL merger , the National Football League was also given exemptions in exchange for certain conditions, such as not directly competing with college or high school football. However, the 2010 Supreme Court ruling in American Needle Inc. v. NFL characterised

12432-614: Was seen as the "Bill of Rights" for labor, as the Act laid down that the "labor of a human being is not a commodity or article of commerce". The purpose was to ensure that employees with unequal bargaining power were not prevented from combining in the same way that their employers could combine in corporations , subject to the restrictions on mergers that the Clayton Act set out. However, sufficiently autonomous workers, such as professional sports players have been held to fall within antitrust provisions. Second, professional sports leagues enjoy

12544-462: Was to keep prices low, not high. The court found that this was not true, but stated that not every "restraint of trade" in a literal sense could be unlawful. Just as under the common law, the restraint of trade had to be "unreasonable". In Chicago Board of Trade v. United States the Supreme Court found a "good" restraint of trade. The Chicago Board of Trade had a rule that commodities traders were not allowed to privately agree to sell or buy after

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