Case Highlight
US Airways Inc. v. Sabre Holdings Corp. et al

It is rare for private antitrust cases to go to trial but that is precisely what occurred in the recently concluded case of US Airways Inc. v. Sabre Holdings Corp. et al. in which The Brattle Group assisted attorneys from O’Melveny & Myers LLP in securing a favorable jury verdict on behalf of US Airways.

Background
In 2011, US Airways sued Sabre in the United States District Court for the Southern District of New York under the Sherman Antitrust Act regarding a contract between the two companies. The case became dominated by two-sidedness, with the closely watched Second Circuit Appeal decision regarding American Express being decided on the eve of trial.

The contract included, among others, a “full content” provision. This provision required US Airways to give Sabre access to information on all of its flights and fares in order to reach the large network of travel agencies using Sabre’s ticket distribution system. However, it also prohibited US Airways from offering lower fares for those same flights in other distribution channels, such as on the airline’s own website. US Airways claimed that Sabre unreasonably restrained trade by imposing this and other provisions, which the airline alleged reinforced Sabre’s market power, stifled competition, and harmed both the airline and consumers.

Brattle’s Role
O'Melveny & Myers LLP retained The Brattle Group to provide economic consulting and expert witness testimony on behalf of US Airways. The Brattle team, led by Michael Cragg and Andy Abere, worked closely with expert witnesses including Nobel Laureate Joseph E. Stiglitz, Brattle principal and Nobel Laureate Daniel L. McFadden, and Jerold L. Zimmerman, who testified at trial on liability, damages, and profitability on behalf of US Airways.

Professor Stiglitz provided testimony on Sabre’s market power and how the challenged contract provisions harmed both the airline and consumers. Importantly, he also provided testimony on the role of “two-sidedness” in thinking about this market. Professor Stiglitz relied, in part, on the testimony of Professor Zimmerman, who analyzed the profitability of Sabre’s ticket distribution system. Professor Stiglitz also opined on what prices Sabre would have charged US Airways “but for” the challenged restrictions. Professor McFadden provided testimony, based on his analysis of data on millions of bookings on US Airways flights, regarding the amount of money the airline was overcharged as a result of the challenged restrictions based on Professor Stiglitz’s “but-for” prices.

Outcome
After nearly eight weeks of testimony and more than 20 hours of deliberation, the jury found that Sabre unfairly restrained trade by imposing unfavorable contract terms on the airline.

"Brattle played a major role in developing the economic theory of the case and in supporting our experts," said Andrew Frackman, a partner at O'Melveny & Myers LLP. "Their help was invaluable in the success of the case."

To learn more about Brattle’s expertise, please contact a member of our team.

Experts Involved
Abere 068
Principal
+1.212.789.3650
Dr. Abere provides economic research, data analysis, and expert witness testimony in cases involving antitrust, contracts, intellectual property, and other commercial litigation as well as regulatory proceedings. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Cragg13
Principal & Chairman
(Cambridge) +1.617.234.5721
(Toronto) +1.416.360.4849
Dr. Cragg has extensive consulting, research, and expert witness experience in corporate finance, financial services, and valuation. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4