DOJ Poised to Sue to Block Sabre’s Deal for Farelogix
DOJ Poised to Sue to Block Sabre’s Deal for Farelogix
(Bloomberg) -- The U.S. Justice Department is preparing to sue to block travel technology company Sabre Corp.’s proposed acquisition of Farelogix Inc. over concerns the deal will harm competition, according to a person familiar with the matter.
The department’s antitrust division is set to file a lawsuit as soon as Monday, said the person. Sabre announced plans Wednesday to close the deal next week.
Sabre agreed to buy Farelogix in November for $360 million. Both companies provide information technology systems that enable airlines to sell tickets.
The Justice Department challenge would follow concerns raised by the U.K.’s antitrust regulator on Friday. The Competition and Markets Authority said its initial investigation of the takeover found Farelogix is a competitive threat to Sabre because it relies on a disruptive business model and has brought innovation to the market even though it’s smaller.
“Should the deal go ahead as planned, the CMA is concerned that Sabre would not face enough competition from other suppliers, leading to higher prices or lower quality services, as well as reduced innovation in the industry generally,” the regulator said.
U.S. antitrust officials are under pressure to get tougher on acquisitions of startups by large technology companies. Advocates of stricter enforcement say the deals have allowed tech firms to solidify their dominance by eliminating rivals.
Sabre declined to comment and pointed to the company’s previous commitment to offer Farelogix products at the same or lower prices and to continue to invest in its technology.
The Justice Department didn’t respond to a request for comment.
Sabre, based in Southlake, Texas, said Wednesday that it would close the deal on Aug. 21. The company said it was extending the merger’s termination date to April 30 to allow time for any Justice Department lawsuit to be resolved.
“Over the past nine months, we believe we have done all we can to address the DOJ’s concerns,” Sabre Chief Executive Officer Sean Menke 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.”
To contact the reporter on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net
To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Gregory Mott
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