Canadian Anti-Trust Regulator Expresses Concerns Over Air Canada-Transat Acquisition

By Paul Riegler on 30 March 2020
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The Competition Bureau, Canada’s anti-trust regulator, came out against Air Canada’s planned acquisition of Transat, saying it would “result in a substantial lessening or prevention of competition in the sale of air travel or vacation packages to Canadians.”

“Eliminating the rivalry between these airlines would result in increased prices, less choice, decreases in service and a significant reduction in travel by Canadians on a variety of routes where their existing networks overlap,” the agency said in a statement.

The agency said there were 83 routes where there would be an overlap, including 49 to Europe and 34 to “sun destinations” such as Florida and the Caribbean.

Air Canada responded with a study by the Montreal Economic Institute, a public policy think tank, that said that the merger would “increase the likelihood” of Transat’s recovery from the economic consequences of the coronavirus pandemic and that the merger should not be judged on how the combined entity would compete with “world leaders” in the airline industry.

The Competition Bureau said that its report draws on data from before the start of the global pandemic, which has since dramatically transformed the entire airline industry as international borders closed and airlines cancelled up to 95% of all flights.

Transat shareholders approved the 720-million Canadian dollar acquisition offer from Air Canada last August, but the deal still faces scrutiny by European anti-trust regulators who have to measure the impact of a takeover that would see Canada’s biggest airline control more than 60% of transatlantic air travel from the country.

Transat said it is nonetheless confident that the deal will win government approval.

“Transport Canada’s assessment will provide a more comprehensive overview of the nuts and bolts of the transaction and of all the benefits for the Canadian public and economy,” said the airline’s CEO, Jean-Marc Eustache, in a statement.

(Photo: Accura Media Group)

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