28-Jun-2011 10:22 AM

Competition Bureau seeks to stop JV between Air Canada and United Continental

Canada's Commissioner of Competition filed (27-Jun-2011) an application with the Competition Tribunal to prohibit a proposed joint venture between Air Canada and United Continental Holdings Inc (UCH). The Commissioner believes that if the joint venture is allowed, it will monopolise 10 important Canada/US routes, and substantially reduce competition on nine additional routes, leading to increased prices and reduced consumer choice on key transborder routes. In addition to challenging the joint venture, the Commissioner is challenging three existing "coordination agreements" between the two parties. The Commissioner believes these agreements allow Air Canada and UCH to coordinate key aspects of competition including, but not limited to, joint pricing and scheduling, as well as revenue sharing. Through these existing agreements, the companies currently have the power to charge passengers inflated fares. [more]

Air Canada provided (27-Jun-2011) a statement in response to the filing a Notice of Application disagreeing with the Commissioner's position. Pending further developments relating to the outcome of the Commissioner's application, Air Canada and UCH have agreed to suspend the proposed transborder joint venture. Air Canada's transborder services remain unaffected.

Air Canada: "The airliness position is consistent with the findings of regulatory agencies around the world, and supported by leading international economists, who have recognised and documented the benefits to consumers of such arrangements. The co-operative relationship between Air Canada and United, which has been conducted in accordance with applicable laws and the terms of antitrust immunity granted by US regulatory authorities and in a manner consistent with the Advisory Opinion issued by the Canadian Competition Bureau in 1996, has provided more efficient and convenient service to customers." Company statement. [more]

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