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Six Questions with Jenny Schwab, Managing Counsel, Antitrust & Global Competition, at United Airlines

Maxime Fischer-Zernin, Karen Kazmerzak, and Ryan Thomas

Six Questions with Jenny Schwab, Managing Counsel, Antitrust & Global Competition, at United Airlines
Jackyenjoyphotography via Getty Images

Jenny Schwab is Managing Counsel, Antitrust & Global Competition at United Airlines. Before joining United in 2020, Jenny was an antitrust partner at Honigman LLP in Chicago. Prior to Honigman, Jenny worked at the Federal Trade Commission for 12 years, including as an attorney advisor to Commissioners Rebecca Kelly Slaughter and Terrell McSweeny, a counsel to the Director in the FTC’s Bureau of Competition, and a staff attorney in the Bureau’s Mergers IV Division. Jenny started her legal career as an associate at Alston & Bird LLP. She is a graduate of Tulane Law School and Emory University.

1. What are your responsibilities as in-house antitrust counsel for United Airlines?

I lead a small but mighty team of two attorneys with responsibility for antitrust and global competition matters for United Airlines, reporting to the Senior Managing Counsel for global competition and alliances. Our primary goal is to support and provide legal guidance to internal business clients. In practice, our responsibilities fall into three areas.

First, my colleague Mary McCarthy and I frequently counsel internal business clients on the antitrust considerations of projects relating to alliances and joint ventures, sales, pricing, and distribution. We are also called on to opine on antitrust developments outside of the company, among many other topics. We often collaborate with our in-house legal colleagues in other practice areas (e.g., labor and employment or corporate and commercial transactions) to provide antitrust support for their work.

Second, I supervise our antitrust compliance program, which includes customized, live training to various departments across the company. Counseling on collaborations with competitors is particularly important given the central and procompetitive role played by alliances and joint ventures in the industry.

Finally, in my government-facing part of the role, I am responsible for interactions with U.S. and foreign competition authorities (and aviation authorities as appropriate), often in connection with the alliances, joint ventures, and other matters on which we are counseling internally. For example, when there is a material change to an airline joint venture relationship, we will engage with the relevant government agencies, often the U.S. Department of Transportation (DOT) and the Antitrust Division of the U.S. Department of Justice (DOJ), to keep them informed of developments. These ad hoc interactions are supplemented with formal applications and notifications, as required, as well as certain annual reporting obligations.

2. How does your in-house role compare to your prior experiences at FTC and in private practice?

My practice has always focused almost exclusively on antitrust, beginning with my time as a junior associate, and later as an FTC attorney and law firm partner. That said, most of my work in prior roles was focused on industries outside of the airlines and transportation, such as health care and retail. Now at United Airlines I am analyzing matters using antitrust and competition laws – continuing what I’ve been doing for 20 years – but at a dynamic company in an industry facing unique issues.

Some parts of being an antitrust lawyer in the transportation industry are similar to my prior experiences. For example, while I had never worked with DOT before joining United Airlines, at the FTC I frequently took part in consultations with other agencies, such as HHS in the health care space. I have long appreciated the value of those interdepartmental conversations, which carries over to the airline industry.

While there are many parallels to my prior work, there was a definite learning curve when I started at United Airlines in the midst of the pandemic. It has been fascinating to learn about the business as well as the aviation industry more broadly. It takes a while to get up to speed on all the acronyms! I am fortunate that we have a fabulous team of in-house colleagues and business partners from whom I really benefit and learn every day. The in-house role also allows me to gain a perspective into our business strategy and plans that I think is exciting and rewarding.

3. What governmental agencies are responsible for competition policy and enforcement in the U.S. airline industry, and how do they carry out this mandate?

Today, responsibility for competition enforcement in the domestic airline industry sits principally with the DOJ and DOT. The DOJ has authority over competition matters across industries by statute, and has been active in competition matters involving the airline industry in a material sense since the airlines were deregulated. Airline matters are generally handled by the Transportation, Energy and Agriculture (TEA) Section, but other sections may join to support TEA depending on workload, or if the investigation is criminal in nature. DOT retains responsibility for certain aspects of the economic regulation and policy in the domestic airline industry. DOT has authority separate from the antitrust laws to investigate commercial activity that may harm competition or consumers or otherwise constitute “unfair methods of competition.” State AGs also can investigate the airlines and bring cases, as they have done recently in joining the DOJ in the challenges to the Northeast Alliance and the JetBlue/Spirit Airlines merger.

Like many agencies and departments within the Federal government, DOJ and DOT cooperate confidentially on investigations and more broadly on policy efforts but remain formally independent. For example, when DOJ challenged the proposed acquisition of Spirit Airlines by JetBlue, DOT put out a statement that said that DOT would continue to investigate separately the carriers certificate transfer application under its authority to enforce against unfair and deceptive practices and unfair methods of competition and that the investigation is open for the duration of the DOJ litigation. I read that as DOT saying it has its own options separate and apart from whatever happens in the DOJ litigation (although the district court recently blocked the merger).

The cooperation between DOJ and DOT is consistent with President Biden’s July 2021 Executive Order on Promoting Competition, EO 14036, which called for a “whole-of-government” approach to competition enforcement. The EO stressed that all agencies, not only DOJ and the FTC, should consider using their authorities to address competition in the industries they oversee.

The takeaway is that there are a lot of government actors out there right now – DOJ, DOT, and State AGs, as well as their international peers – that are applying the competition toolbox to the airline industry, in addition to the private actors who may also bring lawsuits or encourage the government to act.

4. Are there any features of competition policy in the airline industry that are less common in other parts of the economy?

One special feature of the airline industry is the ability to apply for and receive antitrust immunity for joint ventures. Given the regulatory limitations on cross-border mergers and acquisitions in the airline industry, it is necessary for airlines to have the ability to develop relationships that go beyond arm’s-length commercial agreements to provide seamless travel experiences to customers as they travel around the world. In response to this specific and important need, DOT allows airlines to apply for antitrust immunity for certain “metal neutral” joint ventures, i.e., allowing travelers to book airfare from their domestic airline that may require legs on other airlines’ planes—the metal in the analogy. The joint ventures create incentives to cooperate by, for example, sharing in revenue regardless of whose metal a leg is on. Absent DOT’s immunity mechanism, the coordination between airlines involved in joint ventures may fall near or beyond the permissible limits of Section 1 of the Sherman Act. Many other countries have similar frameworks or regulatory approval processes to permit such joint ventures.

5. Are there any changes in the new Merger Guidelines, finalized December 18, 2023, that stand out from the perspective of someone practicing in the airline industry?

A focus of the updated Merger Guidelines is providing more structure to novel theories of harm being pursued by the antitrust agencies. However, we haven’t seen these theories in recent airline litigation, with DOJ relying on a more traditional analysis. DOJ continues to pursue airline cases based on geographic markets for specific origin and destination (“O&D”) city pairs, i.e., specific routes. The logic is that a customer who wants to fly from Chicago to San Antonio isn’t going to substitute that O&D for another route, say from New York to Houston. Therefore, DOJ evaluates competitive effects at the route level, as has been the case historically.

By contrast, in the recent merger trial, JetBlue and Spirit Airlines asserted that competition occurs on a national level, not the route level, because of supply-side substitutability across routes as airlines re-allocate their planes. The defendant carriers argued that the court should consider how airlines regularly move planes into, out of, and between routes based on profitability, and how such mobility of supply should expand the market definition based on ease of entry. While noting that both sides made compelling arguments, Judge Young recently held the relevant markets were each individual O&D pairs where the defendant carriers currently competed.

6. Are there any areas of antitrust enforcement where gaps in agency guidance make it difficult for you to comprehensively counsel internal business clients on the antitrust “rules of the road”?

In counseling we rely heavily on agency guidance, enforcement precedent, and relevant case law. There are sometimes gaps in guidance and precedent, or apparent inconsistencies in enforcement, that can make counseling challenging. This has recently come up in the context of collaborations among competitors in sustainability. Industry participants are actively seeking to adapt their businesses to address environmental issues, including climate change. Given the scope of the issues, collaboration may be necessary to properly address some environmental risks.

United Airlines has a stellar environmental team focusing on these issues, as well as a venture arm focusing on new technologies and solutions, while also supporting sustainability, aerospace, and tech start-ups. An area of particular focus is the development of sustainable aviation fuels (SAFs). It is critical that the industry finds ways to increase the production of SAFs as an alternative to conventional jet fuels. This will require collaborations across a variety of stakeholders including industry participants in the private sector and government.

Many jurisdictions have issued draft or final guidance, which are helpful for companies navigating the intersection of sustainability collaboration and competition laws. Notably, the U.S. has not issued similar guidance. Earlier this year, the International Air Transport Association (IATA) submitted a comment in response to the UK Competition & Markets Authority’s (CMA) consultation on Draft Sustainability Guidance addressing the need for legal consistency across jurisdictions. IATA encouraged the CMA to join with its counterparts elsewhere around the world to develop more far-reaching guidance. IATA’s takeaway is that airlines and other global companies would benefit from global guidelines that create the necessary standards needed for further collaboration.