Canada's competition chief sought Monday to block a joint venture between Air Canada and United Continental, saying it creates a monopoly on key Canada-US routes that will lead to skyrocketing air fares.
"The proposed joint venture would allow Air Canada and United Continental to operate and set prices as one airline," said Commissioner of Competition Melanie Aitken in a statement.
"If allowed to proceed, consumers will face higher prices and even less choice on key, high demand air passenger routes."
The two airlines hold an estimated 55 percent share of trips from Canada to the United States.
Their plan to coordinate schedules, sales and pricing amounts to a merger that would give them a monopoly on 10 transborder routes, including Calgary-Houston, Montreal-Washington, Ottawa-New York and Toronto-San Francisco, Aitken said.
As well, it would "substantially reduce competition" on nine other routes such as Vancouver-Los Angeles, she said, after filing an application with Canada's competition tribunal to stop the deal.
Aitken went on to say that existing agreements between Montreal-based Air Canada and Chicago's United, which merged last year with Continental, "already allow the companies to set prices above competitive levels on all key 19 transborder routes, which alone violates the (anti-trust) act."
"Making matters worse, they now want to fully merge their operations."
Air Canada said in a statement it "strongly disagrees" with the commissioner's assessment.
Their integration was granted immunity in 2009 from US antitrust laws, the airline noted, on the basis that it benefited consumers.
However, it added, "pending further developments relating to the outcome of the commissioner's application, Air Canada and United Continental Holdings have agreed to suspend the proposed transborder joint venture."
© 2011 AFP.
Gravity always wins!