In U.S. mergers, no one waits for this waiting period

Wed Mar 5, 2014 1:06am EST
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By David Ingram

WASHINGTON (Reuters) - Sometime soon, maybe in the next month or so, a federal judge is expected to decide whether the creation of the world's biggest passenger airline, as envisioned by two companies and the U.S. Justice Department, was really a good idea.

But even if she decides to give the merger a thumbs down, an unlikely outcome that would shake investors and the public, it might be too late for her to do much anyway.

The two companies, American Airlines and US Airways, consummated their merger to become American Airlines Group Inc (AAL.O: Quote) on December 9, almost three months ago, according to a securities filing at the time. Executives distributed new stock on the NASDAQ exchange, launched a marketing campaign and touted the future benefits of an integrated flight network, all without a final judgment on whether the merger was legal.

Records reviewed by Reuters show that corporations in the last three years of mergers and acquisitions never waited for the end of a waiting period created by a 1974 antitrust law known as the Tunney Act. The law said the waiting period should be at least 60 days.

Officially known as the Antitrust Procedures and Penalties Act, the law was designed to slow down deals that U.S. antitrust enforcers struck with merging companies. The time is meant to subject the deals to extra scrutiny by the public and a judge, to deter corrupt influence on the legal process.

As one of America's guardians of fair competition, the Justice Department's Antitrust Division will sometimes challenge big mergers with a lawsuit. If settled, the cases are subject to the Tunney Act waiting period before they are final.

But in 18 antitrust settlements filed in court by the Justice Department since January 2011, the deals on average closed 12 days later, according to filings with the U.S. Securities and Exchange Commission and public statements from the companies.

The companies did so with the consent of the department, which says the practice is legal and that companies would miss out on savings if they held off. None waited for a judge's approval before closing.   Continued...

US Airways and American Airlines signs are pictured at Philadelphia International Airport in Philadelphia, Pennsylvania on December 9, 2013. REUTERS/Mark Makela