Commissioner of Competition issues temporary cease and desist order against Air Canada

OTTAWA, October 12, 2000 — The Competition Bureau announced today that the Commissioner of Competition has issued a temporary order requiring Air Canada to cease and desist from offering or selling special discount fares on five routes in Eastern Canada.

The temporary order is in response to an official complaint by Halifax-based air carrier, Canjet. The new low-cost carrier alleges that when it entered the market on September 5, 2000, Air Canada reduced its fares to target Canjet on specific routes.

Based on preliminary information gathered to date, the Bureau believes that Air Canada's pricing response to Canjet's entry into the market could be anti-competitive.

"After careful consideration, I am issuing the temporary order on the grounds that Canjet is likely to be eliminated as a competitor on specific routes and suffer other harm that cannot be adequately remedied by the Competition Tribunal," said Konrad von Finckenstein, Commissioner of Competition. "Investigations such as this are complex. The order will give us more time to assess the situation fairly."

The cease and desist order specifies that, effective immediately, Air Canada must stop offering or selling special L14EASTS fares on 5 routes in Eastern Canada. These routes are: Halifax-Ottawa, Halifax-St. John's, Halifax-Montréal, Toronto-Windsor, and Ottawa-Windsor. The Bureau is satisfied that a temporary order is not warranted for two other routes which are part of Canjet's complaint. These are: Halifax-Toronto and Toronto-Winnipeg. L14EASTS are special discount air fares offered on the five Air Canada routes, which require 14 days advance booking.

The cease and desist order will be in effect for 20 days and will expire on October 31, 2000. If required, the temporary order can be renewed twice for 30 day periods each. The purpose of the temporary order is to provide enough time for the Bureau to decide if it will apply to the Competition Tribunal under the abuse of dominance provision (section 79) of the Competition Act.

"Our investigation continues," said the Commissioner. "The order gives us time to determine whether there is sufficient evidence to apply to the Competition Tribunal for an order prohibiting these fares."

This is the first time the Commissioner has issued a temporary cease and desist order. The Commissioner was given such powers recently through amendments to the Competition Act, passed by Parliament and put into force on July 5^th, 2000. The Commissioner's authority to issue temporary cease and desist orders are exclusive to the airline industry.

• Backgrounder
• 2000-10-12 — Temporary Order under Section 104.1 of the Competition Act

The Competition Bureau is an independent law enforcement agency whose mandate is to maintain and encourage competition in Canada.

For more information, please contact :

Julie Hébert
Communications Directorate
819-953-4257

or

Cynthia Grant
Communications Directorate
819-994-0349