Competition Bureau provides report to Minister of Transport outlining competition concerns in proposed northern airlines merger
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February 26, 2019 – OTTAWA, ON – Competition Bureau
The Competition Bureau announced today, that following a thorough review, it has determined that the proposed merger of First Air and Canadian North is likely to result in a substantial lessening of competition in the provision of passenger travel and cargo services. The effects of the transaction are likely to include reductions in passenger and cargo capacity, increases in price, and reductions in flight schedules.
Many communities in the North rely on air services due to the large geographic areas and limited road infrastructure in certain areas. These services play an important role in economic development, interconnectedness among communities, and the supply of food, healthcare and other goods and services. Many communities served by First Air and Canadian North are accessible only by air for much of the year.
The Bureau’s review focused on services offered by both airlines to communities in Nunavut and the Northwest Territories. In most of the affected areas, the proposed transaction represents a merger-to-monopoly.
The transaction is likely to affect the following areas:
- Nunavut: Qikiqtaaluk and Kitikmeot regions.
- Northwest Territories: Services between Yellowknife and Inuvik.
- Trunk Routes: Ottawa-Iqaluit and Trans-Arctic service (linking Yellowknife to Rankin Inlet and Iqaluit).
The Bureau’s concerns are outlined in a report to the Minister of Transport. Transport Canada is conducting a separate review of the proposed merger with respect to the public interest as it relates to national transportation.
The final decision regarding the proposed merger will be made by the Governor in Council (Cabinet) based on advice from the Minister of Transport.
First Air, a wholly-owned subsidiary of Makivik Corporation, is an airline with headquarters in Kanata, Ontario. First Air operates a route network which includes 32 northern communities in the Northwest Territories, Nunavut and Nunavik, as well as the cities of Edmonton, Ottawa, and Montreal.
Canadian North, a wholly-owned subsidiary of the Inuvialuit Development Corporation, is an airline headquartered in Calgary, Alberta. Canadian North’s route network includes 16 communities in the Northwest Territories and Nunavut, as well as service to Edmonton and Ottawa.
On November 13, 2018, the Minister of Transport started a public interest review of the proposed merger under subsection 53.1(5) of the Canada Transportation Act. As part of any such public interest review, the Commissioner of Competition is required to provide a report to the Minister on any concerns regarding potential prevention or lessening of competition that may occur as a result of the transaction.
This is the first time that the Commissioner has provided a report to the Minister of Transport as part of a public interest review as it relates to national transportation.
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