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Alaska Airlines said Wednesday it has resolved a merger-related lawsuit brought in San Francisco federal court by flyers and travel agents concerned that the company’s acquisition of Virgin America would lead to higher fares and less competition.
The news, announced in a short release, likely removes the final impediment to Alaska’s pending acquisition of the nation’s eighth-largest airline. On Monday, Alaska and the U.S. Justice Department announced they had reached a settlement agreement in which the government will clear the merger, so long as Alaska loosens its codeshare relationship with American Airlines. That settlement must be approved by a court.
The private lawsuit was filed in September by 41 consumers and travel agents, who had hoped the court would block the merger. The judge handling the case, William Alsup, had ruled in October that Alaska could not close its deal without giving the court seven days notice. At that point, a trial had been planned for December.
“Lesser competition can lead to monopolies, and the consumer really loses out in that situation,” Joe Alioto, an attorney representing the plaintiffs, told the Las Vegas Sun in September. “The existence of Virgin America for the free enterprise system is crucial.”
Lawsuits filed by shareholders and consumers are not uncommon after major merger announcements, as Alaska representatives made clear over the past couple of months. The company had argued that its proposed acquisition was not anti-competitive, nor violated anti-trust laws. It had said it was confident it would prevail.
Alaska said it would not share settlement terms.
The airline said it plans to close its deal in the “very near future.”