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Air Canada deal raises monopoly concerns
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CBC News
The federal Competition Bureau moved Monday to head off a proposed joint venture between Air Canada and United Continental.
The bureau called the arrangement "effectively a merger" on all of their Canadian and U.S. operations and said it would create a monopoly on 10 major routes between Canada and the U.S. and substantially reduce competition on nine others.
"The proposed joint venture would allow Air Canada and United Continental to operate and set prices as one airline," Melanie Aitken, commissioner of competition, said in a release.
"If allowed to proceed, consumers will face higher prices and even less choice on key, high demand air passenger routes."
Later in the day, Air Canada issued a release saying it "strongly disagrees" with the commissioner's position.
The airline said the venture will provide "more efficient and convenient service to customers," a position it said was consistent with the findings of regulatory agencies around the world, and supported by leading international economists.
Air Canada also maintained the arrangement has been conducted in a manner consistent with an advisory opinion issued by the Canadian Competition Bureau in 1996.
Airlines have 45 days to respond
It also said the deal was consistent with those reviewed by U.S. regulatory authorities and granted immunity from U.S. antitrust laws on the basis that they provide consumer benefit.
The two airlines said they have agreed to suspend the proposed joint venture. They have 45 days to respond to the commissioner's concerns.
The commissioner is also challenging three existing "co-ordination agreements" between Air Canada and United Continental which allow the two to co-ordinate key aspects of competition including joint pricing and scheduling as well as revenue sharing.
"The current agreements between Air Canada and United Continental already allow the companies to set prices above competitive levels on all key 19 transborder routes, which alone violates the act," said Aitken.
"Making matters worse, they now want to fully merge their operations."
The issue next goes before the Competition Tribunal for a ruling.
American Airlines, British Airways and Spain's Iberia announced a similar venture on transatlantic flights, also in October.
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