New Commission’s investigation concerning the transactions in the air transport sector

On 25 May 2020, the Commission has opened an in-depth investigation to assess the proposed acquisition of Transat by Air Canada, notified on 15 April 2020, under the EU Merger Regulation.

The Canadian airlines Air Canada and Transat are the largest providers of scheduled passenger air transport services between the European Economic Area (EEA) and Canada. More specifically, Air Canada operates flights to Europe through its mainline fleet as well as through its subsidiary Air Canada Rouge, a lower-cost service introduced in 2013, while Transat, the parent company of Air Transat, is also active in the tourism sector, where it develops and markets holiday travel services in Canada, the Americas and Europe.

According to the Commission, the proposed transaction could significantly reduce competition on 33 origin and destination (O&D) citypairs. More particularly, the Commission noticed that, despite the coronavirus outbreak severely conditioned the aviation sector, the transaction could impact the competitive landscape in the mid- and long-term, inasmuch as Air Canada and Transat have been historically competing head-to-head for the passenger air transport services in the EEA, making an effective competition extremely hard for other airlines. Despite the Canadian airline WestJet has expanded its transatlantic operations to the EEA countries, indeed, it is unlikely that it would exert a sufficient competitive constraint on the merged entity.

None of the two airlines submitted commitments during the initial investigation to address the Commission’s preliminary concerns, which now has 90 working days, that is until 30 September 2020, to take a decision.

Marco Stillo