Canada’s Competition Bureau has called out Air Canada’s proposed acquisition of Transat AT Inc as a bad deal for competition.
The Competition Bureau delivered a report to Transport Minister Marc Garneau stating the merging of the two Montreal-based carriers will lead to higher fares and route consolidation.
The competition watchdog says there is an overlap on 83 routes between Canada and Europe, and to leisure destinations in the US and Caribbean.
After a bidding war, Transat shareholders approved a $720 million offer from Air Canada last summer.
Air Canada also needs to satisfy European regulators as it would control 60% of the transatlantic market from Canada.
The post-merger market analysis was made by the Competition Bureau before the coronavirus pandemic.
The work done by the agency could become redundant in the current climate.
Transat has halted all flights until April 30, and may struggle to survive.
CEO Jean-Marc Eustache Transat is ‘calling into question the relevance of any analysis conducted prior to the outbreak.’
"Given the unprecedented impact of the covid-19 crisis on the airline industry and the state of emergency worldwide, we will consider the findings of the Competition Bureau in due course," Air Canada said.
The deal hangs in the balance, not least because Transat’s stock value has plunged nearly 50% since the transaction was agreed in principle.
