The European Commission is launching an in-depth investigation into Air Canada's deal to buy travel company Transat as part of concerns the deal may reduce competition and result in higher prices, with the Canadian tour company delaying the deal as a result.
An EC preliminary investigation said Air Canada and Transat have been competing head-to-head for passengers, and the commission is worried the proposed deal could significantly reduce competition on 33 origin and destination city pairs between Europe and Canada.
The commission said it would make a decision on whether to approve the deal on September 30.
In a release Transat said it has taken note of the European Commission's decision to open an in-depth investigation to assess the proposed transaction with Air Canada and it is currently studying the EC's decision in order to prepare the next steps in the process.
Transat said the extension is part of the EC's normal process of assessing the impact of transactions submitted for its approval, which is currently complicated by the COVID-19 pandemic and the impact it is having on the international commercial aviation market.
To take into account the resulting longer delays, Transat has informed Air Canada of its decision to activate the first one-month extension of the outside date set for the transaction, provided for in the Arrangement Agreement. It is therefore postponed for the time being to July 27, 2020, from June 27.
The Arrangement Agreement provides for the possibility of postponing the deadline for three one-month periods simply by notification from one of the parties, and then for three additional periods under certain conditions.
Transat said that if the required approvals are obtained and the conditions satisfied, the arrangement is now expected to close early in the fourth quarter of the 2020 calendar year.