Air Canada’s bid for Transat faces in-depth investigation into EU merger

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Air Canada’s bid for tour operator Transat AT Inc. faces an in-depth investigation from European Union regulators who said the deal could impede competition by combining the two largest airlines connecting Europe and the Canada.

The European Commission has set a deadline of September 30 to rule on the deal, citing concerns that “the transaction could significantly reduce competition on 33 routes,” said a statement sent by email on Monday.

A potential competitor of the new company, WestJet Airlines Ltd., is unlikely to be able to compete strongly on the routes that regulators see as problematic, said the EU.

Transat, based in Montreal, agreed in August to acquire $ 18 per share in cash. Shares have since plummeted far below this level, suggesting that investors are wondering whether the $ 720 million ($ 515 million) deal will come in light of the coronavirus crisis, which has compromised travel business perspectives. They tumbled again on Monday, falling 7.7% to $ 6.95 at 12:37 p.m. in Toronto. Air Canada rose 0.4% to $ 16.77.

Margrethe Vestager, EU competition chief, said the pandemic should not prevent scrutiny of the agreements.

“It is a difficult time, especially in markets severely affected by the coronavirus epidemic, but a return to normal and healthy market conditions must be based on markets that remain competitive,” she said. in the press release.

Air Canada and Transat officials did not immediately return messages requesting comments.



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