Supreme Court Blocks LATAM Marriage With British Airways And American Airlines

There’s no plural marriage in Chile, where the Supreme Court blocked proposed unions between LATAM and both American Airlines and British Airways.

Joint-venture agreements between LATAM and AA and BA have been three years in the making. The proposed AA joint venture (JV) would have covered routes to:

Brazil
Chile
Colombia
Paraguay
Peru
Uruguay

Meanwhile, a separate JV relationship with British Airways would have covered more routes to more countries, including:

Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Paraguay
Peru
Uruguay

Chile is now off the list. In a surprise ruling, the Chilean Supreme Court cited competition concerns as the reason for blocking the JV relationship. The court held:

We are in the presence of an agreement between competitors … who individually each have relevant market shares and who would acquire a joint market power that would be hard to challenge in a post-deal scenario.

LATAM officials were “surprised” and called the ruling a “setback” for LATAM and the nation. Consumer rights groups and a Chilean tourism association had sued to block the JV relationship.

Chile may be out, but the other nations are in. The JV relationships have already been approved in Brazil, Colombia, and Uruguay.

In a statement, American Airlines said:

We believe our joint business would have brought tremendous benefits to Chile, as we expect it will in Brazil, Colombia, and other South American countries that have already approved the agreement without conditions.

CONCLUSION

This was the Supreme Court of Chile, so there is no appeal for LATAM. Will consumers be helped or hurt because of the decision? It’s too early to tell, though likely helped by indeed maintaining more competition. That doesn’t mean it should have been blocked, though, especially after Chile’s anti-trust tribunal had approved the JV relationships.