Canada’s competition watchdog has applied to block a proposed joint venture between Air Canada and United Continental Holdings.The commissioner of competition says that if the joint venture is allowed, it will monopolize 10 important Canada-U.S. routes, and “substantially reduce competition” on nine others.
Routes out of Toronto that would be affected are to Chicago, Cleveland, Denver, Houston, New York and San Francisco.
The commissioner has applied to the competition tribunal to block the proposed joint venture, and to unwind three existing “co-ordination agreements” between the airlines.
It says the joint venture, in which the airlines would co-ordinate schedules, could drive up prices for consumers by 15 per cent.
Federal law prohibits Canadian airlines from merging with foreign firms, but the joint venture “would achieve the very same result,” according to a release from the competition commissioner.
United and Continental merged in the U.S. in 2010, but continue to operate separately as they await approval from the U.S. federal Aviation Administration.
Air Canada proposed a joint venture with the U.S. airline in October, 2010.
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Source: Toronto Star
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