TORONTO — European regulators are launching an in-depth investigation into Air Canada’s deal to buy travel company Transat AT amid European Commission concerns the deal may reduce competition and result in higher prices.

A preliminary investigation said Air Canada and Transat have been competing head-to-head for passengers.

The commission is worried the proposed deal could significantly reduce competition on 33 origin and destination city pairs between Europe and Canada.

These include 29 where both companies offer direct services and four where one company flies direct and the other one indirect via one of its hubs.

The commission said even if WestJet expanded its transatlantic operations to Europe, it is unlikely that it would be enough.

Air Canada’s deal to buy Transat for $720 million has been agreed to by shareholders, but still requires regulatory approval in Canada and the European Union.

First announced in May 2019, the proposed Air Canada – Transat deal appeared to be potentially on track before the COVID-19 pandemic hit. In March 2020 Canada’s Competition Bureau raised its own concerns.

Source: The Canadian Press