|Editions | myCNN | Video | Audio | Headline News Brief | Feedback||
Burden of Proof
Will Justice Allow United's Acquisition of US Airways?; John and Patsy Ramsey to Speak Out on Lie Detector TestAired May 24, 2000 - 12:30 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GRETA VAN SUSTEREN, CO-HOST: United Airlines wants to buy US Airways. What will the Justice Department do? Will they block it or permit it, and how will it affect your frequent flier miles?
Also, John and Patsy Ramsey are reportedly ready to speak out about their lie detector test. That's next on BURDEN OF PROOF.
ANNOUNCER: This is BURDEN OF PROOF with Greta Van Susteren and Roger Cossack.
VAN SUSTEREN: Hello and welcome to BURDEN OF PROOF.
It's a busy legal day today. United Airlines has announced plans to acquire US Airways. It's a move that will make United, already the largest airline in the world, a dominant force in air travel on both U.S. coasts and everywhere in-between. A United Airlines press conference is planned for this half hour, and we will bring it to you live.
ROGER COSSACK, CO-HOST: Also in the news today, John and Patsy Ramsey will address the media, the subject of what they'll say has not been confirmed by their attorney, but authorities in Boulder, Colorado, have already started to discredit the results of lie detector tests the couple has taken. That press conference should also take place this half-hour, and we will bring you that as well.
Joining us today in New York, Mark Orwoll, managing editor of "Travel & Leisure" magazine.
VAN SUSTEREN: Joining us today here in Washington, Jason Goggins (ph), former federal prosecutor Steve Berk and former Justice Department deputy assistant attorney general in charge of antitrust litigation, Robert Litan.
COSSACK: And in the back, Thembi Duncan (ph), Ardra Coleman (ph) and Robert Lamkin (ph).
I want to go right to you, Bob. We are talking about the merger of these airlines. Let's get to the important issue: Are the prices going to go up?
ROBERT LITAN, FMR. DEPUTY ASST. ATTORNEY GENERAL: It all depends on what the Justice Department does. And I think they are obviously going to take a close look at this. The Justice Department is already suing American Airlines for predatory pricing. They are going to worry about concentration at specific hubs on the East Coast.
COSSACK: Well, what is going to happen here, I suppose, is that this is going to give United Airlines, as we said, make them the biggest airlines in the world. Won't that give them the ability, since there is no regulations of the airlines, to pretty much charge what they want?
LITAN: All depends on the hubs because competition on prices are determined largely out of where you fly. And there are probably three or four hubs that the department is going to focus on: Boston, New York, Washington and Baltimore; there may be some others.
Now, they have already made a preemptive strike, that is United and USAir. They have already spun-off or they have proposed to spin- off part of their operations at D.C. National to a new airline that is going to be run by Robert Johnson. But the question is: Is Justice going to insist for more?
VAN SUSTEREN: Steve, what is it that the Justice Department cares about when they look at these issues and mergers?
STEVE BERK, FORMER FEDERAL PROSECUTOR: Well, of course, they look at the consumer, and whether the consumer will be harmed. And Bob makes a good point, they will look at the hubs, but they will also look at sort of rural America.
Look Greta, it is going to be as easy for you to get to L.A. or to New York, but what about small cities like Burlington, Vermont that are served now by USAir and United? In the future, they will only be served by United. So they are going to look at the Burlington, Vermonts of the world and see if consumers in rural America are going to be harmed.
VAN SUSTEREN: Can the federal government, though, actually force, like an airline, to service a community, or even to charge a particular fare?
BERK: I don't think they can do either of that. I mean, they can decide in the front-end whether or not this merger is going to go through, and then after that, it's really up to the marketplace to determine what the fares will be and what services will be provided in the future.
COSSACK: Bob, it seems to me that, by definition, competitions suffers when you have a merger like this, and you have one airline that just becomes so dominant that they just shadow everything else -- cast a shadow over everything else. How can we, as a consumer in that situation, protect ourselves? It seems like the...
VAN SUSTEREN: Take the train.
COSSACK: I hear that whistle blowing. I mean, I don't know what else to do. LITAN: Well, markets protect you, and you have got to look at concentration at the right level. At the national level, sure, United is going to have a bigger market share. But, as Steve points out, you have got to look at market by market, and that's where consumers really judge the prices. And DOJ is going to do a market-by-market test. And as I said, this is an opening bid that USAir and United have given in the sense that they want to divest some of their roots, and Justice may require more divestitures.
VAN SUSTEREN: Is there also the issue too, Bob, is that if you have a market where someone dominates, let's say United Airlines, and it becomes dominant in a particular market into Vermont, and they drive the price up because they are the ones who run that market. You know, frankly, if I had enough cash, maybe I will start up a new airline. You have had Jet Blue start up recently out of JFK. Do they also look at the fact that the market may create competition?
LITAN: Yes, but it all depends on the slots on the airwaves. I mean, if there are no more slots, no more landing gates, in your Burlington, Vermont example, and I don't whether Burlington has any excess capacity, then Justice will forget about any potential new competition. So it all depends on capacity at these airports.
VAN SUSTEREN: Mark. I have an awful lot of miles on US Airways. What is going to happen with my miles? Am I better off or worse off with the merger?
MARK ORWOLL, "TRAVEL & LEISURE": You are probably going to be slightly better off. United has one of the most innovative and comprehensive frequent-flyer programs of any airline in the United States. US Airways has a good one. But you can fly on the partner, more than 20 partner airlines...
VAN SUSTEREN: Let me ask you this, though. I mean, it sounds all well and good, but I fly mostly out of Washington, D.C., and that market is being spun-off to another airlines. Suddenly, I have got all these miles but no airline to board.
ORWOLL: Well, I think in Washington, D.C. you are not going to have that problem. But in the places like Hickory, North Carolina and Altoona, Pennsylvania, yeah, you are going to have a problem. No question about it.
COSSACK: Mark, what happens when this merger -- if this acquisition goes through, will there be more airlines to choose from for frequent-flyer travelers?
ORWOLL: Well, no, if this goes through, there will be fewer airlines to choose from.
COSSACK: No, what I mean by that is will there be more airlines that will take the frequent-flyer miles?
ORWOLL: No, I don't think that's necessarily going to be the case. No indication as such. COSSACK: United, as it stands right now, has partnerships with several other airlines. If they acquire USAir, will they then -- what I'm suggesting is, they will take in the airlines that USAir is involved with.
ORWOLL: USAir only has eight other partner airlines, and it had no global alliance. So you are not going to be -- if you're a United member, you are not going to be benefiting from the acquisition of USAir in that regard in any dramatic way.
COSSACK: Greta, I am fighting for your miles. I just can't seem to get anywhere for you.
VAN SUSTEREN: I know, I am going to be on Amtrak, I am afraid.
Steve, United is sort of unique in that it's owned, more than 50 percent owned by the employees. How does that enter into this? or doesn't it?
BERK: Well, it certainly enters into it. We are reading a lot today about the pilots, and whether the pilots will agree to this. The pilots' union. I believe, owns close to 25 percent of United Airlines. So they will have a big say in whether or not this merger goes through or not. And interestingly, their interest in remaining the first pilot in the cabin, so to speak, will be something that will be front and center.
VAN SUSTEREN: Bob, good for the pilots or bad for the pilots who own a lot of shares in United or can't we tell?
LITAN: We can't tell. All we know is the shareholders of USAir have made out like gangbusters today.
VAN SUSTEREN: Why?
LITAN: Because the offer was at $60 a share, and the stock was trading yesterday at 25. And I noticed, just before going on the show, it is up like 22 points right now. Whether it is going to benefit United shareholders, different matter. And a lot of that may depend on what the Justice Department does, how many routes are spun- off and so forth.
A lot of the pilots for United reportedly don't like the deal because they are worried about a loss of seniority in their system.
COSSACK: All right, let's take a break. When we come back, more on the United-US Airways deal. And up ahead, John and Patsy Ramsey address the media. Stay with us.
(BEGIN LEGAL BRIEF)
The L.A. District Attorney's office is seeking to get four more criminal convictions overturned in conjunction with the corruption investigation into the police department.
Already 75 convictions have been overturned in the wake of the scandal.
(END LEGAL BRIEF)
VAN SUSTEREN: Good news for our Internet-savvy viewers: you can now watch BURDEN OF PROOF live on the World Wide Web. Just log-on to CNN.com/Burden. We now provide a live video feed, Monday through Friday, at 12:30 p.m. Eastern time. If you miss that live show, the program is available on the site at any time via video-on-demand. You can also interact with our show and even join our chat room.
COSSACK: We're back talking about the United Airlines USAir acquisition.
Bob, what will the Justice Department go through in deciding whether or not this acquisition will be allowed. What are the things that they will be looking at?
LITAN: Well, they're going to look at each of these markets, hubs or maybe smaller cities. They're going to find out what proportion of the total gates the UAL and the USAir combination will end up having. I -- it's hard to give you a numerical threshold.
COSSACK: Do they then, what, compare it to other existing airlines in terms of what the dominance of the market would be?
LITAN: Yes, there are sort of implicit benchmarks, and they'll worry about how concentrated is it going to be. Are they going to have 60 or 70 percent of the gates, are they going to have 30 percent or whatever. I can't tell you a magic number but I'd be willing to guess that if it's probably above 35 or 40 percent there may be red flags that'll go on. And the Justice Department will tell them: Hey, I think you're going to have to divest some of these routes.
VAN SUSTEREN: Mark, when the media started doing all this merging and acquisition in the past year, it seemed like it set off contagious acquisition fever, merger fever. Do you think we are going to see that in airline if this deal goes through?
ORWOLL: Well, if it goes through I think a lot of the larger airlines are obviously going to consider acquiring smaller airlines. However, as we've heard already, the Justice Department has been very, very tough on airlines that want to merge: going after American; going after Northwest and Continental with their alliance. So this is going to be a tough one to get through.
VAN SUSTEREN: Well, you've had TWA going -- acquiring Ozark; Northwest getting Republic; USAir's been Alleghany, Mohawk, PSA and Piedmont. It doesn't sound like it's been a huge hurdle to acquire.
ORWOLL: Well, when you're dealing with some of these larger mergers like this, I think the stakes are so much higher, that the focus of attention and the -- all of the obligations that these airlines are going to have to meet are going to be much greater.
VAN SUSTEREN: So are -- if you're a betting man, is this going to happen or not?
ORWOLL: Well, I'm concerned more about what the owners of United, that is, the employees are going to say. And because the labor problems inherent in something like this are so strong, I have some real doubts that this is going to go through.
COSSACK: Mark, you're with Travel & Leisure. Now I'm an airplane passenger, is an acquisition like this going to make the airplanes more comfortable -- more...
VAN SUSTEREN: There'll be no more turbulence.
COSSACK: ... more passenger-friendly or is it going to be more like the -- what I've seen -- I'm getting used to, being jammed in like a cattle car?
ORWOLL: Well, I think one of the nice things about competition is that every airline has to be as good as its competition. The less competition, the less impetus there is for them to make the flights more comfortable. There is a trend in this, among the airlines, though, to give you more room. I hope that continues, I don't think this is going to help that though.
VAN SUSTEREN: I don't know what airline you're flying, Mark.
Steve, the Department of Transportation, do they have some involvement in this?
BERK: I don't know that, Greta, my sense is that they would have some involvement in this.
VAN SUSTEREN: Bob, you're shaking your head.
LITAN: It was taken away from them in 1989 for domestic routes but they had some authority on international routes. So if there's any competition problem on the international routes, which I don't think there is, there would be.
VAN SUSTEREN: But USAir certainly flies internationally, does United fly internationally?
LITAN: Yes, they both fly to Europe.
VAN SUSTEREN: So I assume that there is maybe some issue.
LITAN: Absolutely, and DoJ, Justice will consult the Transportation people before they do anything.
COSSACK: Mark, it seems to me now, that every time I want to upgrade or use one of my upgrades and I call them up, they say: Well, we're sorry you can't get upgraded on that flight because you're too late, or whatever...
VAN SUSTEREN: You're lucky you got a seat.
COSSACK: Yes, no, that's true too. But with all of that going on and you having more and more of a concentration, like you say, isn't it going to make it more difficult for frequent flyers to upgrade and to get those reservations?
ORWOLL: Well, actually, United has one of the best customer service reputations. Certainly is better than the telephone hell that people have to go through with USAir. So I think anybody coming from the USAir frequent flyer program will to the United program will appreciate the better customer service. It has a good reputation.
VAN SUSTEREN: Steve, if you're a betting man, is it going to go through or not?
BERK: I going to bet that it does go through.
VAN SUSTEREN: Why?
BERK: I think that what they are going to be able to do is modify it some. I think that one point that you sort of implied is: there's got to be barriers to entry in certain markets and I think that if the barriers of entry are low enough to allow new competition to come into various markets, I think the Justice Department is going to let this go through. But I do think they're going to let it go through only with significant sort of spinning off, whether it be D.C. or Boston routes or other routes. But I think it's going to go through.
VAN SUSTEREN: We're going to take a break. When we come back: John and Patsy Ramsey are talking to reporters in Atlanta today. But authorities in Boulder, Colorado, where their 6-year-old daughter was found dead more than three years ago, are preemptively discrediting what they might say.
Stay with us.
Q: Why is a San Diego man banned from using e-mail, the Internet or a home computer for three years after he is released from federal prison?
A: It is part of his sentence for bilking more than 200 people out of Beanie Babies he promised to sell them online.
VAN SUSTEREN: Though no one has confirmed if the Ramseys have taken and passed lie detector tests in conjunction with the 1996 death of their daughter, JonBenet, the city spokesperson for Boulder, Colorado, told a Denver television station that, quote: "The Ramsey family could take polygraph exams at any time for publicity purposes. For law enforcement purposes, the Boulder police have set up the criteria they want, and that's the FBI."
Steve, what do you make of the fact that Boulder wants the FBI to do the polygraph examination of the Ramseys? The Ramseys say: Anybody but the FBI.
BERK: Well, look, I mean, a polygraph test is only as good as the person administering the test. And the FBI has folks that have been doing it for 20 or 30 years and they have very strict protocols on how the test is done.
VAN SUSTEREN: But so do non-FBI polygraph people. They can meet the same protocols.
BERK: Without a doubt, Greta. But, you know, there is certainly a range. It is like anything else, or any other business, there are people that are very good and very credible and there people that are not. And it seems to me what Boulder has said is: We know what the FBI's reputation is, this is what we want; as opposed to somebody else that they would have to pre-screen or have to get comfortable with. And so there is that range out there, and that is why, in part, these tests are not admissible in court.
COSSACK: You know, I think, Steve, one of the issues with the polygraph examination is that different people administering it, you can get different results. I mean, they are not that kind of definite scientific certain, and I think probably that's one of the reasons that, at least the Boulder police, are looking for the FBI.
I don't really know -- I suppose, as a lawyer, having your client pass any test would be a good thing, I suppose.
BERK: Well, look, Roger, and you all know this better than I, but this has become a public relations battle, in a sense. And certainly, anything that the Ramseys do becomes nationwide news. And so, in certain ways, yes, they are looking for any kind of nugget that then will sort of bounce the public relations battle to the other side.
VAN SUSTEREN: You know what is sort of bizarre is the fact that the Ramseys somehow feel compelled to go and prove their innocence. You know, the Constitution doesn't say they have to do that. But they've been pummeled so much with bad publicity that it has almost shifted the burden; agree or disagree, Steve?
BERK: The burden seems to be always shifted in high-profile cases, right? I mean, in every high-profile...
VAN SUSTEREN: Fair?
BERK: I wouldn't say it is fair, but that's what happens. Now interestingly, what they may also be worried about, and this may be a preemptive strike, is there is always rumblings and murmurs that there may be an indictment out in Colorado at some point. And so what they are doing is, the saying goes, you know, a good defense is a good offense. And so in some ways they are going on the offensive.
VAN SUSTEREN: Let me stop you both right now. We are going to go to New York now for the press conference United Airlines is holding about their intended acquisition of US Airways.
(INTERRUPTED BY COVERAGE OF A LIVE EVENT)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
|Back to the top||
© 2001 Cable News Network. All Rights Reserved.|
Terms under which this service is provided to you.
Read our privacy guidelines.