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Canada's competition czar has filed an application with the
country's Competition Tribunal to prohibit a joint venture between Air Canada
and United Continental Holdings.
Star Alliance partners Air Canada and United already have
laid the groundwork for a revenue-sharing joint venture for transborder flights. The airlines have antitrust immunity and were scheduled to launch the
joint venture this year.
Melanie Aitken, Canada's commissioner of competition, said
the joint venture would enable Air Canada and United to "monopolize 10
important Canada-U.S. routes." She considers the joint venture to
effectively be a merger between United Continental and Air Canada.
"If allowed to proceed, consumers will face higher
prices and even less choice on key, high-demand air passenger routes," she
In addition to challenging the joint venture, Aitken is
challenging agreements that allow Air Canada and United to coordinate pricing
and scheduling and share revenue.
"Through these existing agreements, the companies
currently have the power to charge passengers inflated fares," she said.
"Moreover, if these anticompetitive provisions are further implemented,
with or without the joint venture, Canadians will pay even more for less choice
and higher fares."
In separate statements, Air Canada and United said they
"strongly disagree" with Aitken.
"United's transborder cooperation with Air Canada has
provided customers traveling between Canada and the U.S. with more and better
service," United said.
According to reports, an amendment to Canada's Competition
Act allows the country's competition commissioner to argue cases of alleged
anticompetitive behavior before the Competition Tribunal, which can force a decision.
Source: Travel Weekly