Airline not liable under antitrust statutes by terminating agent agreement

Tokarz v. LOT Polish Airlines (E.D.N.Y. Oct. 3, 2006).  Despite repeated warnings by the airline, the agent continued to discount tickets by passing on front-end override commissions to customers, a practice that violated the parties’ written commission agreement.  After several competing agents complained to the airline about the discounting agent, the airline exercised its right to terminate the agreement with the discounting agent.  The terminated agent sued, alleging that the airline’s termination violated federal and New York antitrust statutes because it was the product of an illegal conspiracy among the airline and the complaining competitors.

After a decade of litigation that culminated in a trial, the court held that the airline had not violated the antitrust statutes because it had acted unilaterally, not as part of any concerted action with the complaining competitors.

In its opinion, the court noted that an airline, like any other company that sells services or products through other entities, “can announce its resale prices in advance and refuse to deal with those who fail to comply.”  This helpful statement confirms an airline’s right to prevent an agent from creating fictional fares on a computer reservation system or engaging in any other kind of fare abuse.

Update:  By an order issued December 21, 2007, the Second Circuit affirmed the trial court’s judgment.  On October 6, 2008, the U.S. Supreme Court denied the agent’s petition for a writ of certiorari.

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