Mergers: EU Commission opens in-depth investigation into proposed acquisition of Transat by Air Canada
The European Commission has opened an in-depth investigation to assess the proposed acquisition of Transat by Air Canada, under the EU Merger Regulation. The Commission is concerned that the proposed transaction may reduce competition in the passenger air transport services between the European Economic Area (EEA) and Canada.
Air Canada and Transat are respectively the first and second largest providers of scheduled passenger air transport services between the EEA and Canada. At this stage, the Commission is concerned that the proposed transaction could significantly reduce competition on 33 origin and destination (O&D) citypairs between the EEA and Canada.
The Commission’s preliminary market investigation revealed that Air Canada and Transat have been historically competing head-to-head for the passenger air transport services between the EEA and Canada. At this stage, the Commission found that even if the Canadian airline WestJet has expanded its transatlantic operations to the EEA countries, it is unlikely that WestJet would exert a sufficient competitive constraint on the merged entity with respect to the O&Ds that the Commission found problematic following its preliminary market investigation.
The Commission investigated the extent to which the coronavirus crisis would impact Air Canada, Transat and their competitors’ operations and hence the competitive landscape in the mid- and long-term. The Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether it is likely to significantly reduce effective competition.
Air Canada and Transat have decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Executive Vice-President Margrethe Vestager, responsible for competition policy, said: “Air Canada and Transat are the two leading airlines operating a wide network of routes between Europe and Canada. We will carefully assess whether the proposed transaction would negatively affect competition in these markets leading to higher prices, reduced quality or less choice for travellers flying over the Atlantic.
This is a challenging time, especially in markets severely impacted by the coronavirus outbreak, but a return to normal and healthy market conditions must be based on markets that remain competitive.”#
Arianna Podesta –
