Competition Bureau issues report outlining competition concerns with Air Canada’s proposed acquisition of Transat

The Competition Bureau has issued this report:

The Competition Bureau announced on March 27 it has concluded that Air Canada’s proposed acquisition of Transat (Air Transat) is likely to result in a substantial lessening or prevention of competition in the sale of air travel or vacation packages to Canadians.

The Bureau’s concerns are outlined in a report delivered to the Minister of Transport by the Commissioner of Competition. The report will inform Transport Canada’s public interest review of the proposed transaction as it relates to national transportation.

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 Bureau’s analysis determined that the effects of the transaction would apply to 83 routes, including:

  • 49 overlapping routes between Canada and Europe; and
  • 34 overlapping routes between Canada and sun destinations in Florida, Mexico, Central America, and the Caribbean.

The transaction also represents a merger of the only two carriers offering nonstop service on 22 of these routes.

Our assessment is based upon a forward-looking analysis using data and information collected prior to the current COVID-19 pandemic. The Bureau recognizes that the impact of these events on the Canadian airline industry appear to be significant in the near term. The ultimate impact of these events may be relevant to the Bureau’s views on the proposed transaction but it is impossible to know the full extent and duration of any impact at this time.

Transport Canada has until May 2, 2020 to complete its public interest assessment and provide it to the Minister. The final decision regarding the proposed transaction will be made by the Governor in Council (Cabinet) based on a recommendation from the Minister.

Quick facts

  • Air Canada and Transat operate two of Canada’s four largest airlines and primary integrated tour operators providing vacation offerings to Canadians.
  • On August 26, 2019, the Minister of Transport started a public interest review of the proposed merger under subsection 53.1(5) of the Canada Transportation Act (CTA). As part of any such public interest review, the Commissioner of Competition is required to provide a report to the Minister on any concerns regarding potential prevention or lessening of competition that may occur as a result of the transaction.
  • Under the CTA, the Commissioner is also to provide an assessment to the Minister of the adequacy of any undertakings that may be proposed by the merging parties to address competition concerns raised in his report.
  • This is the second time the Commissioner provided a report to the Minister as part of a public interest review as it relates to national transportation.