Earlier this year, the Biden Justice Department notched a win when a federal judge blocked the proposed JetBlue–Spirit Airlines merger on anticompetitive grounds. The airlines have now scrapped the deal. The administration’s suit against the merger is among the starkest examples of its interfering with the efficient workings of free enterprise, to the detriment of all.
Since its first months in office, the administration has sought to use executive-branch power to police mergers and acquisitions, stridently voicing concerns about monopoly power, reduced competition, and higher prices for consumers. The White House and Justice Department rarely cite hard evidence of these dangers because the evidence points the other way: mergers and acquisitions generate growth and keep our market economy humming.
Early in my career, I chaired Steinway Musical Instruments, maker of the famed pianos. During that period, we acquired several domestic instrument manufacturers, including the makers of Leblanc clarinets and Holton French horns. Uniting those brands with ours, we improved sales, made the combined businesses more efficient, and kept instrument prices lower for consumers. The acquisitions enabled our company and those we acquired to compete effectively with foreign firms and to keep jobs in the U.S.
This isn’t remarkable; it’s Business 101. But that basic lesson appears lost on the Biden administration, which has unleashed both the Justice Department and the Federal Trade Commission to quash any corporate union it deems imperfect, rather than target ones with genuine anticompetitive aims. As a result, rational business transactions that might once have taken months now stall for years, resulting in unnecessary delays and litigation costs.
The JetBlue–Spirit action may be the most glaring example of the administration’s counterproductive policy on mergers. “If allowed to proceed,” Attorney General Merrick Garland alleged in 2023, “this merger will limit choices and drive up ticket prices for passengers across the country.” In fact, the merger of these two airlines would have united the nation’s sixth- and seventh-largest carriers, creating the nation’s fifth-largest airline. The new entity would have generated just a third of the revenue—and carried only half the passengers—of the nation’s fourth-largest airline, United. Clearly, fears of a new airline monopoly are overblown.
Though Garland claimed the merger would “eliminate Spirit’s unique and disruptive role in the industry,” he ignored a simple fact: Spirit hasn’t proven itself profitable or sustainable on its own. Through its lawsuit, the Justice Department has increased the probability of outcomes it would surely rather avoid: Spirit being forced either to exit markets or declare bankruptcy.
The industry context matters here. Airline carriers operate on razor-thin margins, save for brief profitable interludes in a seemingly unending series of external shocks—oil spikes, recessions, pandemics. The number of major U.S. carriers has dropped from double digits in the 1980s to just a handful today, the inexorable result of capital intensity, thin margins, and state-financed foreign rivals. But while industry consolidation has meant fewer competitors, the industry remains highly competitive for the survivors.
For the airlines, preventing further U.S. consolidation amounts to unilateral disarmament, and, over time, it means higher fares and diminished service for American travelers. Workers may benefit from the administration’s efforts to enforce the status quo in the short run, but limiting the industry’s ability to become sustainable will threaten more jobs over the long haul.
The White House’s opposition to mergers and acquisitions has chilled such activity across industries, including energy, biotechnology, and even fast food. In some cases, like the Microsoft-Activision deal, the government lost in court, and the deal went forward; in others, the dealmakers have given up rather than endure the bad press and legal headaches.
But whether the parties win, lose, or surrender, a White House opposed to companies joining forces does all Americans a disservice. Remember: the consumers whom the Biden administration claims to defend with its suffocating antitrust enforcement are also shareholders. Stiff-arming mergers and acquisitions and forcing businesses to miss out on cost savings and efficiencies ultimately harms pension funds, 401k holders, and institutional endowments.
The Biden approach also willfully ignores jobs and wages lost if businesses can neither compete nor be acquired or merge. A Spirit stuck in limbo means an airline that will eventually have to let people go or shut its doors. Making the basic work of business political makes doing business harder. That hurts the United States, its workers and consumers, and its economic future.
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