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UPDATE 1-U.S. DOJ opposes Continental joining Star alliance

Mon Jun 29, 2009 2:06pm EDT

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* DOJ cites concerns over competition, fares

* DOJ says sees few consumer benefits from Star alliance

* Continental says confident of U.S. DOT approval

* Continental shares up 2.3 percent (Adds comment from Continental Airlines)

WASHINGTON, June 29 (Reuters) - The U.S. Justice Department opposes broad antitrust immunity for Continental Airlines Inc (CAL.N) to join UAL Corp's (UAUA.O) United Airlines and other members of the Star alliance, documents showed.

In a filing late on Friday with the Transportation Department, antitrust enforcers said approval was likely to harm competition on some international routes, including flights between China and U.S. and Canadian cities.

The proposed agreements also could hurt domestic competition and raise fares on some routes, Justice Department lawyers wrote in public comments.

The DOJ also said the alliance had offered little in the way of consumer benefits.

In a statement, Continental declined to comment on specific aspects of the Justice Department's comments. It said it would address those issues in its response to be filed with the Transportation Department, which will make the determination on final approval.

"We remain confident that DOT will approve our application," the company said. "That action is necessary to correct the competitive imbalance that now exists and safeguard our future."

Antitrust immunity would permit carriers to share pricing, scheduling and other information within the Star Alliance. That group includes US Airways Group Inc (LCC.N), Deutsche Lufthansa AG (LHAG.DE), Air Canada (ACa.TO) (ACb.TO), Air China Ltd (601111.SS), Thai Airways International PCL THAI.BK and several other carriers.

The Transportation Department earlier this year granted provisional approval to the United and Continental application, pending review of public comments.

Continental shares were up 2.3 percent at $8.98 in afternoon trading. (Reporting by John Crawley in Washington and Deepa Seetharaman in New York, editing by Gerald E. McCormick and Lisa Von Ahn)



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