Alaska Air Merger Suit Judge Warns He’ll Block Pre-Trial Closing

(Bloomberg) -- Alaska Air Group Inc. can’t complete its merger with Virgin America Inc. unless it gives at least seven days advance notice to the San Francisco federal court judge presiding over a consumer antitrust case contending the tie-up is anticompetitive.

U.S. District Judge William Alsup issued an order Thursday warning Alaska Air that “any consummation will be subject to divestiture,” meaning any attempt to close the $2.6 billion deal before a December trial will be disallowed by the court, said Joseph Alioto, who is representing the plaintiffs in the antitrust case.

“They can’t do anything,” the attorney said. “Basically it’s a preliminary injunction.”

The airlines’ merger is still being reviewed by the U.S. Justice Department’s antitrust division. Bloomberg reported in September that the companies met with top division officials to address concerns that the combination could undermine competition. Alioto’s civil suit was filed against Alaska Air alone, last month.

“Lawsuits such as this are not uncommon with mergers,” according to a joint statement from the airlines. "We disagree with the plaintiffs and will defend this deal accordingly." The statement did not address the judge’s order.

The case is Grace v. Alaska Air Group Inc., 16-cv-5165, U.S. District Court, Northern District of California (San Francisco).

--With assistance from Mary Schlangenstein and David McLaughlin To contact the reporter on this story: Andrew Harris in Washington at aharris16@bloomberg.net. To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Andrew Martin