The European Commission takes note of Air Canada and Transat’s announcement that they have decided to terminate the proposed merger agreement according to which Air Canada intended to acquire sole control over Transat. The Commission confirms that the discussions with the companies and the proposed remedy package thus far were not able to adequately address the competition concerns identified by the Commission. The Commission had opened an in-depth investigation into the proposed transaction on 25 May 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Air Canada and Transat are the two leading airlines with a wide network of routes between Europe and Canada. We opened an in-depth investigation because we had concerns that the proposed transaction would negatively affect competition in these markets leading to higher prices, reduced quality or less choice for travellers.

EU merger control policy standards and framework also apply in times of severe shocks affecting the economy. While the coronavirus outbreak has strongly impacted the airline sector, the preservation of competitive market structures is essential to ensure that the recovery can be swift and strong. Markets should remain dynamic and competitive when travellers will again be able to fly over the Atlantic for holidays or to visit their beloved ones.

Every case has to be assessed on its facts and merits. In this case, the Commission investigated the extent to which the coronavirus crisis would impact Air Canada, Transat and their competitors’ operations and based on the information available to date, reached the preliminary conclusion that in the long-run Air Canada and Transat would likely remain actual or potential competitors on the vast majority of the routes between the European Economic Area and Canada, which they both operated before the crisis.

Based on the in-depth analysis carried out during the Phase II investigation, the Commission’s preliminary findings were that the proposed transaction would raise competition concerns on a large number of transatlantic routes. Based on the results of the market test, the remedies offered appeared insufficient.”

More information will be available on the Commission’s competition website, in the Commission’s public case register under the case number M.9489.