A Delta merger would face tough antitrust review

By John Crawley - Analysis

WASHINGTON (Reuters) - Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) would face an unprecedented airline antitrust review if it decides to propose a merger with either Northwest Airlines (NWA.N: Quote, Profile, Research, Stock Buzz) or United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz).

Industry consultants, lawyers, and former government officials agree either merger would present the U.S. Justice Department with its toughest airline test. And with a crucial election year underway, Congress would certainly weigh in.

"None of this is going to be easy," said Darryl Jenkins, a Virginia-based airline consultant. "This is an awfully big merger. No matter who does it, it will be looked at very carefully."

A Delta merger review would include serious scrutiny of large international route networks. It would also test a popular assumption that the merger parties would get more favorable treatment from the Bush administration compared with a possible Democratic one in 2009.

Antitrust lawyers polled by Reuters said none of the leading presidential candidates was considered an antitrust maverick, although Democrats have had a reputation for being more aggressive than Republicans in challenging mergers.

James Burnley, a former U.S. transportation secretary under President Ronald Reagan, said there is merit in rolling out something soon to ensure scrutiny by Republicans, but "that doesn't mean anyone gets a free pass."

Delta management wants to begin formal merger talks with Northwest and United, the Wall Street Journal reported last week. The airlines have not commented.

For sheer size and reach, No. 3 Delta hooking up with either No.2 United or No. 5 Northwest is only comparable to an earlier bid by United to swallow US Airways. That attempt collapsed in 2001 after an lengthy antitrust review, completed by the Bush Justice Department, raised serious competition concerns.