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Veteran
- Oct 29, 2003
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Canada’s competition watchdog has applied to block a proposed joint venture between Air Canada and United Continental Holdings, warning it’s a bad deal for passengers.
The Air Canada-United Continental proposal “would mean the integration of all their North American operations,” commissioner of competition Melanie Aitken said in an interview.
The airlines say they’ve suspended any move toward the joint venture “pending further developments.”
Aitken contends that if the joint venture is allowed, it will create a monopoly on 10 important Canada-U.S. routes, and “substantially reduce competition” on nine others.
Similar arrangements between airlines in the U.S. have driven prices 15 per cent higher, her office says.
Aitken has applied to the federal competition tribunal to block the proposed joint venture, and to unwind three existing “co-ordination agreements” between the airlines that are not fully implemented.
Aitken argues the joint venture agreement would effectively be a merger of the airlines, despite that fact Canadian airlines are not allowed to merge with foreign airlines.
The competition bureau’s move brought a swift statement from United and Continental. The two airlines have agreed to merge in the U.S., but continue to operate separately as they await final approval from the U.S. Federal Aviation Administration.
The airlines “strongly disagree with the Bureau’s position and worked in good faith with the Bureau to address its concerns,” they said.
Air Canada also issued a statement saying it “strongly disagrees” with Aitken’s position.
“The airlines’ position is consistent with the findings of regulatory agencies around the world, and supported by leading international economists, who have recognized and documented the benefits to consumers of such arrangements,” it said.
Canada’s competition watchdog has applied to block a proposed joint venture between Air Canada and United Continental Holdings, warning it’s a bad deal for passengers.
The Air Canada-United Continental proposal “would mean the integration of all their North American operations,” commissioner of competition Melanie Aitken said in an interview.
The airlines say they’ve suspended any move toward the joint venture “pending further developments.”
Aitken contends that if the joint venture is allowed, it will create a monopoly on 10 important Canada-U.S. routes, and “substantially reduce competition” on nine others.
Similar arrangements between airlines in the U.S. have driven prices 15 per cent higher, her office says.
Aitken has applied to the federal competition tribunal to block the proposed joint venture, and to unwind three existing “co-ordination agreements” between the airlines that are not fully implemented.
Aitken argues the joint venture agreement would effectively be a merger of the airlines, despite that fact Canadian airlines are not allowed to merge with foreign airlines.
The competition bureau’s move brought a swift statement from United and Continental. The two airlines have agreed to merge in the U.S., but continue to operate separately as they await final approval from the U.S. Federal Aviation Administration.
The airlines “strongly disagree with the Bureau’s position and worked in good faith with the Bureau to address its concerns,” they said.
Air Canada also issued a statement saying it “strongly disagrees” with Aitken’s position.
“The airlines’ position is consistent with the findings of regulatory agencies around the world, and supported by leading international economists, who have recognized and documented the benefits to consumers of such arrangements,” it said.
