Air Canada deal raises monopoly concerns

Competition Bureau calls deal with United Continental a merger

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."

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.

When the deal was announced in October, Air Canada CEO Calin Rovinescu in a release described it as something that would streamline travel.

"By managing pricing, scheduling and sales through a stronger joint venture, the carriers will be better able to serve customers by offering more travel options," he said at the time.

American Airlines, British Airways and Spain's Iberia announced a similar venture on transatlantic flights, also in October.

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