Agreement with Air Canada and United Continental Resolves Competition Concerns Over Proposed Joint Venture and Alliance Agreements

Marketwired

OTTAWA, ONTARIO--(Marketwire - Oct 24, 2012) - The Competition Bureau announced today that it has reached an agreement with Air Canada and United Continental Holdings, Inc. that will protect consumers and preserve competition on 14 key, high-demand air passenger routes between Canada and the United States.  Air Canada and United Continental currently coordinate certain key aspects of competition via three existing agreements and intend to enter into a joint venture that will, in effect, merge their flight operations on routes between Canada and the U.S.

"The Consent Agreement the Bureau reached with Air Canada and United Continental will ensure that passengers do not face higher prices and less choice on high-demand routes between Canada and the U.S. resulting from the airlines'' proposed joint venture and coordination agreements," said John Pecman, Interim Commissioner of Competition.

Under the terms of the Consent Agreement filed with the Competition Tribunal, Air Canada and United Continental have agreed not to implement their joint venture or to coordinate via existing "coordination agreements" on 14 air passenger routes between Canada and the U.S.  On these routes, the airlines are prohibited from:

  • coordinating their prices;
  • coordinating the number of seats available at each price;
  • pooling revenue or costs; and
  • sharing commercially sensitive information.

The Consent Agreement will remain in force for as long as any one of the coordination agreements or the joint venture remains in force. As markets evolve during this period, the Consent Agreement provides that specific prohibitions can be suspended or reinstated as appropriate.

The Bureau will appoint an independent monitor to ensure that Air Canada and United Continental comply with the terms of the Consent Agreement. 

In June 2011, the Commissioner of Competition filed an application with the Competition Tribunal seeking to block the joint venture and to undo certain provisions within existing coordination agreements between Air Canada and United Continental. In its application, the Bureau identified 19 transborder routes, including ten monopoly routes, where competition would be substantially reduced owing to the joint venture and the coordination agreements. Following a thorough review of further information and analysis regarding the impact of the joint venture and coordination agreements on the 19 routes, the Bureau determined that competition on five of the routes originally identified is unlikely to be substantially harmed as a result of the airlines'' coordination and, as a result, the Consent Agreement only applies to the 14 remaining routes.

For additional information, please see the backgrounder.

A copy of the agreement will be available shortly on the Competition Tribunal website.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

See also:

Competition Bureau Seeks to Block Joint Venture between Air Canada and United Continental (June 2011): http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03386.html

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