OVERVIEW
MANAGEMENT
PERFORMANCE
POSSIBILITIES
CAPITALS
ACTIVITIES
ACTORS
BURGESS
|
COMPETITION
MERGERS AND ACQUISITIONS The BFD ... Sen. Elizabeth Warren (D-Mass.) publicly asked the U.S. Department of Transportation to block JetBlue's $3.8 billion takeover of Spirit Airways. 
Illustration of Elizabeth Warren holding a bag of money ... Sarah Grillo/Axios Original article: https://www.warren.senate.gov/imo/media/doc/2022.09.15%20Letter%20to%20DOT%20re%20merger%20authority%20and%20Spirit-JetBlue.pdf and Read PDF : Elizabeth-Warren-2022-09-15-Letter-to-DOT-re-merger-authority-and-Spirit-JetBlue.pdf Peter Burgess COMMENTARY The letter from Senator Warren to Secretary Buttigieg is extremely substantive ... full of relevant detail ... and well argued. This is not a surprise coming from Senator Warren, but a surprise if it was coming from any of most other legislators. When I was young and paying a lot of attention to a lot of different things, it was common to have mergers and acquisitions held up on 'antitrust' grounds. In both the United States abd Europe monoply power was being addressed aggressively during the period up to the 1970s. Up to the time Margaret Thatcher became Prime Minister in the UK and Ronald Reagan became President in the United States, the business community was very careful about attracting attention by having a dominant position in an industry, but this does not seem to be a concern since then. Hardly any mergers have been stopped on anti-trust grounds in the last 40+ years, and big corporations make use of their market power and low level of meaningful competition to run their product lines with very high margins. I knew more than most accountants about production practices and cost accounting. Early in my career in the 1960s there were a lot of major product lines that were produced in very high volumes with very low profit margins. Costs, prices and profits tended to move upwards at more or less the same rate at that time, but the energy cost disruption of the 1970s changed a lot of business analysis. For many product lines, higher energy related cost resulted in business losses, and by the time solutions to the profit crisis were implemented, a new attitude to margin management had emerged ... helped in no small part by what business schools were teaching. Since around 1980 there has been substantial productivity improvement, and the resultant product profit improvement has been allocated virtually 100% to the owner/investor community with little going to lower prices for consumers or higher wages for workers. It is easy to understand how it is that the wealth of investors has become the highest it has ever been. Senators like Senator Warren understand this behavior. Whether or not other Senators 'get it' is not clear, but they certainly behave as if they don't. Peter Burgess | ||
|
The BFD
Sen. Elizabeth Warren (D-Mass.) publicly asked the U.S. Department of Transportation to block JetBlue's $3.8 billion takeover of Spirit Airways. Why it's the BFD: Antitrust is normally the purview of the DOJ or FTC, but this is a reminder that DOT has special authority to block airline mergers that it finds aren't in the public interest. No court case required. Reality check: Warren has publicly opposed plenty of mergers that have gone through. Primary sources: Read Warren's letter to DOT. The bottom line: 'Warren cited Spirit's own analysis that a JetBlue deal raises antitrust concerns as evidence the agency should find the deal is against the public interest. The airline prepared the analysis for investors in May as shareholders considered competing bids from JetBlue and Frontier.' — Leah Nylen, Bloomberg. September 15, 2022 The Honorable Pete Buttigieg Secretary U.S. Department of Transportation 1200 New Jersey Avenue SE Washington, DC 20590 Dear Secretary Buttigieg, I write to ask the Department of Transportation (DOT) to use its full statutory authority to address consolidation in the airline industry and to express my serious concerns about the proposed merger between JetBlue and Spirit Airlines announced in July.1 DOT has significant and historically underutilized authorities to protect competition in the domestic air travel market to ensure any route transfers are “consistent with the public interest,”2 and I urge you to consider utilizing these authorities as you continue your commendable consumer-protection efforts. DOT Must Fully Utilize Its Competition Authorities Going Forward See full text and footnotes in PDF The JetBlue-Spirit Deal Is Likely to Reduce Airline Competition and Harm the Public Interest. See full text and footnotes in PDF DOT Must Take a Proactive Role in Airline Competition Matters—Not Defer to DOJ. See full text and footnotes in PDF Thank you for your continued leadership on consumer-protections efforts and for your attention to this matter. Sincerely, SIGNED________ United States Senator Elizabeth Warren
| The text being discussed is available at | and |