It would be unlawful for Eastern Airlines to acquire control of National Airlines because such a merger would cause "a substantial lessening of competition" in several markets, primarily between the Northeast and Florida, a Civil Aeronautics Board administrative law judge ruled yesterday.
The ruling by Judge Richard J. Murphy follows similar judges' rulings earlier against proposed National takeovers by Pan American World Airways and Texas International Airlines.
All three decisions will go before the full CAB for review. The Pan Am and Texas International arguments are scheduled to be heard next Thursday, and a CAB spokesman said final decisions on all three will likely come this summer.
In yesterday's order, Murphy found that the proposed Eastern acquisition does pass the public interest test the board applies with respect to the protection of employes of the two airlines. He also found that the merger would not create a monopoly, although it would result in the formation of the second largest airline in the free world.
But, Murphy said, elimination of competition between Eastern and National in the New York-Florida, Washington-Florida, New York-Washington, and intra-Florida markets would result in a substantial lessening of all competition in those markets, which he said puts the merger in a violation of the Federal Aviation Act.
Murphy also contended that non-regulatory barriers existed preventing the entry of new airlines into the markets where the Eastern-National merger would cause a loss of competition.
These barriers include a short-term shortage of aircraft, difficulty new airlines are having in obtaining use of now-congested airports, and the marketing strength that an Eastern-National combination could exert to fight off new competitors, he said.
Although National Airlines had no comment on the development, Eastern said, "We are dissapointed at the out-moded philosophy obviously applied in justifying this decision."
The company emphasized that Murphy's ruling was "but one of several procedural steps required in proceedings like this. It has no binding qualities." The company said it was "confident that the CAB itself and the president will ultimately endorse our merger application."
Eastern contended that National already is withdrawing from the "competitive" markets the CAB is seeking to preserve, and that "other airlines, such as Air Florida, have already moved into these markets."
"TWA, American and Allegheny are standing ready to inject extensive new competitive service into these areas," Eastern claimed.
The airline that ultimately receives CAB approval for a merger with National will be subjected to a bidding war for the airline.
In its earlier ruling against take-overs by Pan Am and Texas International, the CAB said both actions would result in a substantial loss of actual competition on certain routes and a similar loss of "potential competition" that might occur on other routes.
Both Eastern and Pan Am have offered $50 a share for National shares, while Texas International has offered $15 cash and $35 principal amount of 11 3/4 percent senior sinking fund debentures due 1989 for each share of National it doesn't already own. Pan Am and Texas International each own about 25 percent of National's stock already, but that stock has been placed in trusts that don't allow the two to exercise any control over National.