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Decades-Running Antitrust Claims Against Sabre Continue To Overcome Hurdles

Before being acquired by American Airlines, US Airways sued Sabre for anticompetitive conduct under the Sherman Act. The case begins trial later this spring, and the district court’s recent ruling on summary judgment highlights several interesting facets of the statute of limitations applicable to the Sherman Act, and how market definition can be open to significant dispute.
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Background

Sabre operates a global distribution system (GDS), “a computerized platform that connects travel suppliers, including airlines, to travel agents who purchase tickets on behalf of the traveling public.”[1] GDSs are acknowledged to represent a two-sided market, connecting airlines with travel agents for the purchase of airfare. 

US Airways’ suit challenges its contract terms that required US Airways “(1) to offer the same content through Sabre’s GDS as it offers through other booking channels, (2) to provide content to Sabre at prices not to exceed prices charged on other booking channels, (3) not to steer customers to book on its own website or induce travel agents to bypass Sabre’s GDS and (4) not to impose a surcharge on tickets booked through Sabre.”[2]

Sufficient Proof of Market Power

Sabre moved for summary judgment on US Airways’ Section 1 and Section 2 claims. Sabre argued that, because the GDS was a two-sided market, US Airways should be required to show anticompetitive conduct in both markets (airlines and travel agents), in light of the Supreme Court’s decision in Ohio v. American Express Co., 138 S. Ct. 2274 (2018) and the Eastern District of New York’s decision in In re American Express Anti-Steering Rules Antitrust Litigation, 361 F. Supp. 3d 324 (EDNY 2019), and could not do so. US Airways, by contrast, argued that its claims should proceed to trial because it had made a sufficient showing that there was a Sabre-only market, and that Sabre maintained a “lock” on the travel agent side that made the services of other GDS platforms “not reasonably interchangeable.” The Court sided with US Airways, distinguishing the facts from the Amex cases, where plaintiffs “did not make a legally permissible allegation that Amex possessed pre-contract market power that compelled the merchants’ acceptance,” and concluding that US Airways could “offer evidence from which a reasonable jury could conclude that Sabre had sufficient market power to force US Airways to accept the anticompetitive contracts.”

Although Sabre argued that the evidence showed that customers could switch providers easily, and that at least two other GDSs held the same purported market power that Sabre possessed, US Airways pointed to evidence of supra-competitive pricing by Sabre and market shares of around 50% of the relevant markets. The District Court was persuaded by that evidence, observing that no competitor to Sabre had successfully entered the GDS market in 30 years, that Sabre had not updated its technology, that the economic profits Sabre derived from its activities “far exceed the economic profits of its comparator firms and main customers,” that Sabre “maintains a net fee that is far above the competitive level,” and that Sabre “charges airlines different pre-booking fees that are not explained by differences in the cost of providing the service.”[3] The District Court concluded that US Airways “has proffered sufficient evidence for a reasonable jury to conclude that Sabre had monopoly power.”

Statute of Limitations Triggers

US Airways sought damages under Sections 1 and 2 of the Sherman Act. Sabre sought to exclude as time-barred any damage claims arising out of the 2006 contract between the parties, which US Airways challenged as imposing supracompetitive prices. The District Court agreed that such claims were barred by the Sherman Act’s four-year statute of limitations,[4] because the 2006 contract was signed more than four years prior to US Airways’ initiation of the present suit. However, the court held that “damages arising from other anticompetitive conduct between 2007 and 2011 are not precluded.”

In analyzing Sabre’s arguments, the District Court first noted that, as a general rule, “a cause of action accrues and the statute [of limitations] begin to run when a defendant commits an act that injures a plaintiff’s business.”[5]  Where, however, a defendant is engaged in a “continuing antitrust violation, a subsequent overt act that is a part of the violation that injures the plaintiff . . . starts the statutory period running again, regardless of the plaintiff’s knowledge of the alleged illegality at much earlier times.”[6]  The District Court then examined the Second Circuit’s holding in Berkey Photo, Inc. v. Eastman Kodak Co., where the Second Circuit noted that “a purchaser suing a monopolist for overcharges paid within the previous four years may satisfy the conduct prerequisite to recovery by pointing to anticompetitive actions taken before the limitations period.”[7]

The question of Sabre’s liability arising from the 2006 Contract therefore turned, the District Court concluded, on whether Sabre’s continuing business relationship with US Airways constituted an “overt act” restarting the statute of limitations, or was simply a “manifestation” of the contract, which did not restart the limitations period.[8]    Concluding that Sabre’s performance under the 2006 Contract constituted a mere manifestation of the 2006 act, rather than continuing overt acts, the District Court concluded that the statute of limitations barred Section 2 claims predicated solely on performance under the parties’ contract.[9]  The District Court stressed, however, that US Airways could maintain a Section 2 claim arising from Sabre’s conduct independent of the 2006 Contract between 2007 and 2011, and that liability could attach if US Airways could prove that: “(1) Sabre engaged in willful conduct to acquire or maintain monopoly power independent of the 2006 Contract and within the four years preceding the filing of this action in 2011, (2) Sabre had monopoly power at the time of the conduct and (3) the conduct resulted in damages.”[10]

Key Takeaways

It remains to be seen whether the District Court’s conclusion – that the Supreme Court’s core holding in Amex should not apply – will be appealed and upheld. Any such decision may impact the continuing strength of Amex in markets involving dominant defendants, including the question of whether plaintiffs that are able to allege defendants’ significant market power (here, around 50% of market share) may be able to avoid some of the hurdles seemingly required in the Supreme Court’s 2018 decision.

The District Court’s Order also provides additional clarity regarding the difference between “overt acts” and “mere manifestation” for statute of limitations purposes. Litigants would be well advised to keep the Sherman Act’s four-year statute of limitations in mind when considering suit. The District Court’s Order also highlights, however, that actions not directly tied to contractual performance may continue to be actionable, even if the parties’ actual contract falls outside of the statute of limitations.

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ArentFox Schiff’s Antitrust & Competition team regularly advises companies, associations, and other member-governed organizations on antitrust compliance, and strategies that align with their business goals.


[1] US Airways v. Sabre Holdings Corp., et al., CA. No. 11-cv-2725 (LGS), ECF No. 1129, at 2 (S.D.N.Y. Mar. 24, 2022) [hereinafter, Order].
[2] Id. at 3.
[3] Id.
[4] 15 USC § 15b.
[5] Order at 10 (quoting Zenith Radio Corp. v. Hazeltine Rsch. Inc., 401 US 321, 338 (1971)).
[6] Order at 10-11 (quotations omitted, citing Klehr v. A.O. Smith Corp., 521 US 179, 189 (1997) and others).
[7] 603 F.2d 263, 296 (2d Cir. 1979).
[8] Order at 11.
[9] Id. 12-13.
[10] Id. at 13.

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