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AMR Corp.’s acquisition of Trans World Airlines Inc., as well as other pending carrier mergers, may face a new legal roadblock. Sen. Bryon Dorgan introduced a bill Tuesday that would block any airline merger that gives a carrier more than 10 percent of the national market. The North Dakota Democrat said he expects to add co-sponsors in the next several weeks and to push for action on the measure later this spring. In a twist, however, Dorgan applies the ban retroactively to Jan. 1. In a meeting with reporters, the senator said this would require American Airlines to undo its acquisition of TWA if the carriers close the deal in the coming weeks, as expected. “This is very difficult to do,” Dorgan said. “But Congress ought to have a bill to stop this.” One legal expert questioned whether applying the ban retroactively would violate the Fifth Amendment, which restricts the government’s ability to seize private property. “I don’t think you can retroactively eradicate a contract,” the expert said. “This really needs to be checked on.” Dorgan criticized the U.S. Department of Justice for approving the TWA-American deal last week and the U.S. bankruptcy court for approving a reorganization plan that does not let the carrier remain independent. He said the court should have voided a discount ticket deal TWA had with investor and financier Carl Icahn. TWA then could have used those funds to maintain its operations. The senator also criticized UAL Corp.’s proposed acquisition of US Airways Group Inc., saying that deal prompted American to go after TWA and that it could lead to a merger among Continental Airlines Inc., Delta Airlines Inc. and Northwest Airlines Corp. “We ought to have a timeout,” Dorgan said. “We shouldn’t be in a situation where we end up with only three carriers.” Dorgan said he plans to discuss his bill with Sen. Charles Grassley, an Iowa Republican who is chairman of the finance committee. Grassley was the only Republican to vote in 1999 for a moratorium on agribusiness mergers. He also said he would ask Senate Commerce Committee Chairman John McCain, R.-Ariz., for support, though he questioned whether he would sign on. Dorgan said his bill would have a much greater chance of passage if he exempted the TWA transaction, which enjoys strong support from Missouri’s political leaders. But he said the deal with American was so harmful to competition that he could not ignore it. The bill joins a similar measure in the House sponsored by Rep. Louise Slaughter. The New York Democrat’s bill, however, would not require carriers to unwind mergers that have closed. Rather, she has said she hopes to get the House to vote on the bill before any deals are completed. According to Dorgan, lawmakers are seriously concerned about the airline industry, and he predicted Congress would pass some kind of legislation this year. But he said it was too early to tell if his moratorium will be attached as an amendment. “Legislation will certainly pass in this Congress dealing with passenger rights,” Dorgan said. “The question is what else will be involved.” One reason Congress must get involved is the perception that the Bush administration is liable to be weak in protecting competition, Dorgan said. “I don’t expect this administration to tackle antitrust enforcement issues in an aggressive way,” he said. “Nothing in the president’s background says he would push antitrust.” Copyright (c)2001 TDD, LLC. All rights reserved.

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