U.S. Questions Twa's New Deal `Serious Concerns' about Commissions

By From and wire reports | St Louis Post-Dispatch (MO), May 13, 1995 | Go to article overview

U.S. Questions Twa's New Deal `Serious Concerns' about Commissions


From and wire reports, St Louis Post-Dispatch (MO)


The Justice Department's antitrust chief said Friday that she has "serious competitive concerns" about TWA's agreement to pay 10-percent commissions to travel agents if they send more business to TWA.

Federal trustbusters said they are closely examining the settlement, announced earlier this week between St. Louis-based Trans Worl Airlines Inc. and a national travel agents' group.

"An agreement between all travel agents and an airline to increase that airline's sales at the expense of other carriers raises serious competitive concerns," said Assistant Attorney General Anne K. Bingaman.

The government scrutiny is the latest twist in a battle over February's rapid-fire announcements by major airlines that they would cap - at $50 - commissions paid to travel agents for round-trip air tickets.

The cost-cutting moves, which changed an industry policy of paying at least 10 percent commissions, sparked howls of complaint from travel agents and an antitrust lawsuit against TWA and other major airlines by the American Society of Travel Agents (ASTA).

Earlier this week, TWA said it had reached a tentative settlement with ASTA. In exchange for being dropped from the lawsuit, TWA said it would lift the $50 commission cap for tickets sold from last Feb. 15 and through at least Sept. 30.

That part of the deal doesn't bother the Justice Department. Instead, the department is raising eyebrows over another provision under which TWA will continue paying 10-percent commissions to travel agents if its revenue from travel agent ticket sales rises 10 percent above last year.

TWA defended the settlement.

"We feel we have done nothing wrong," said spokesman John McDonald. "We're going to cooperate with the Department of Justice in any inquiries they might make.

"But we are certainly confident that anything that has been agreed to is above-board, and we feel good about it," McDonald said.

ASTA officials couldn't be reached for comment.

Anti-trust laws prevent companies from colluding to set prices. The TWA situation seems to tread along the edges of anti-trust limits, said Thomas Greaney, a St. …

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