Air Canada, Transat deal faces intense EU antitrust scrutiny

BRUSSELS (Reuters) – Air Canada’s (AC.TO) bid for Canadian tour operator Transat AT Inc may result in higher prices and less choice for flights between Europe and Canada, EU antitrust regulators said on Monday as they opened a full-scale investigation into the deal.

Montreal-based Air Canada is hoping Transat (TRZ.TO) will boost its leisure travel business and help it better compete with rival WestJet Airlines WJA.TO.

The European Commission said the deal could significantly reduce competition on 33 routes between Europe and Canada, with both historical rivals.

The EU antitrust enforcer said other European airlines were just distant competitors and that WestJet was not a sufficiently strong rival.

“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,” European Competition Commissioner Margrethe Vestager said in a statement.

The companies had declined to offer concessions to address its concerns during the EU’s preliminary review of the deal. Regulators set a Sept. 30 deadline for their decision. The Canadian Competition Bureau in March also voiced concerns.

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