In its lawsuit, the government asked Judge Leo Sorokin to order the airlines to end their "Northeast Alliance" partnership, saying it would lead to higher fares in busy Northeastern airports.
The agreement allows American and JetBlue to sell each other's flights in their New York-area and Boston networks and link frequent flyer programs, giving them more muscle to compete with United Airlines and Delta Air Lines in the Northeast.
American and JetBlue have denied wrongdoing and asked Sorokin to dismiss the lawsuit.
The Justice Department's lawsuit signaled the Biden administration's interest in trying to inject more competition into the airline industry, where American and three other airlines control 80% of the domestic market.
(Reporting by Diane Bartz; Editing by Leslie Adler)