The U.S. Department of Justice filed a civil antitrust lawsuit Wednesday that aims to block a $360 million deal in which travel-technology giant Sabre Corporation would acquire Farelogix, Inc., a software company that provides ticket-booking services to airlines.
Sabre shares dipped slightly on the news.
Per a press release that accompanied the suit, the DOJ claims that the acquisition would eliminate competition in the travel market that largely benefits airlines and consumers.
“Sabre’s proposed acquisition of Farelogix is a dominant firm’s attempt to take out a disruptive competitor that has been an important source of competition and innovation,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, said. “If allowed to proceed, the acquisition would likely result in higher prices, reduced quality, and less innovation for airlines and, ultimately, traveling American consumers.”
Sabre, which has long operated on outdated tech, is the dominant provider of booking services in the United States, holding more than 50 percent of airline bookings through travel agencies. The company’s revenues totaled approximately $3.9 billion in 2018.
Farelogix’s innovative approach in the travel market, according to the release, “has injected much-needed competition into stagnant booking services markets,” allowing airlines to leverage “their ability to turn to Farelogix to negotiate lower fees with Sabre and the other [global distribution systems], and to reduce their reliance on GDSs for booking services.”
Despite the DOJ suit, Sabre is planning to push ahead with the acquisition. Sabre and Farelogix have extended the new termination date of their acquisition to April 30, 2020.
“Over the past nine months, we believe we have done all we can to address the DOJ’s concerns,” Sean Menke, Sabre president and chief executive officer, said in a statement. “While we hope the DOJ will ultimately recognize that this transaction is pro-competitive, we are prepared to vigorously defend the deal in court if necessary.”