Competition Bureau Announces It Will Not Oppose Acquisition of Canadian Airlines

OTTAWA, December 21, 1999 — The Competition Bureau has announced that it will not oppose the proposed acquisition of Canadian Airlines Corporation by Air Canada and its partner 853350 Alberta Ltd.

After tough negotiations, Air Canada has signed enforceable Undertakings designed to enhance the competitive climate in the airline industry in Canada.

Having determined that Canadian is facing imminent insolvency, the Commissioner of Competition decided that the merger, with undertakings, is more pro-competitive than a liquidation through bankruptcy proceedings.

The undertakings substantially address the possible terms of restructuring outlined in the Commissioner's letter to the Minister of Transport on October 22, 1999.

"The outcome of this transaction, and the concessions made by the two firms in response to the Bureau's concerns provide the best solution possible for consumers, under the circumstances," said Konrad von Finckenstein, Commissioner of Competition. "Opening the market to competition from other airlines across the country will provide a valuable discipline on air fares."

In the Undertakings, Air Canada has agreed to:

• sell its new interest in Canadian Regional Airlines Limited, at reasonable terms and subject to a timetable set out by the Commissioner;
• surrender slots at Pearson International Airport for assignment to other Canadian carriers;
• in the event that a Canadian discount carrier begins to serve Eastern Canada, Air Canada will refrain from establishing its own discount airline service until September 30, 2001.
• surrender key facilities (loading bridges, gates, counters etc.) at airports across the country.

"Taken together, these undertakings will make it much easier for an existing airline to expand its network and for new entrants to establish themselves in the market," von Finckenstein added.

Backgrounder

Enforceable Undertakings (PDF: 707 KB)

The Competition Bureau is an independent law enforcement agency that is responsible for merger review and the lawful conduct of business in Canada, as defined by the Competition Act.

For more information please call:

Ray Pierce
819-953-4308

Frances Phillips
819-994-4994