Agreement with Air Canada and United Continental Resolves Competition
Concerns Over Proposed Joint Venture and Alliance Agreements
OTTAWA, ONTARIO -- (Marketwire) -- 10/24/12 -- 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
The Bureau will appoint an independent monitor to ensure that Air
Canada and United Continental comply with the terms of the Consent
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 Canadaand 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
The Competition Bureau, as an independent law enforcement agency,
ensures that Canadian businesses and consumers prosper in a
competitive and innovative marketplace.
Competition Bureau Seeks to Block Joint Venture between Air Canadaand
United Continental (June 2011):
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