Competition Bureau releases report identifying competition concerns with WestJet’s proposed acquisition of Sunwing
October 26, 2022 – GATINEAU, QC – Competition Bureau
The Competition Bureau has concluded that WestJet's proposed acquisition of Sunwing Vacations and Sunwing Airlines is likely to result in a substantial lessening or prevention of competition in the sale of vacation packages to Canadians.
The Bureau's concerns are outlined in a report delivered to the Minister of Transport by the Commissioner of Competition. The report will inform Transport Canada’s public interest review of the proposed transaction as it relates to national transportation.
Eliminating the rivalry between these integrated airlines and tour operators would likely result in increased prices, less choice and decreases in service for Canadians. It would also likely result in a significant reduction in travel by Canadians on a variety of routes where their existing travel networks overlap.
The Bureau’s review determined that these effects would apply to 31 routes between Canada and Mexico or the Caribbean. The transaction also represents a merger of the only two integrated airlines and tour operators offering non-stop service on 16 of these routes.
The impacts of the COVID-19 pandemic were considered extensively to identify concerns regarding the potential prevention or lessening of competition that may occur as a result of the proposed merger. The Bureau examined competition between WestJet and Sunwing’s pre-pandemic networks as well as their current plans.
Transport Canada has until December 5, 2022 to complete its public interest assessment and provide it to the Minister.
The final decision regarding the proposed transaction will be made by the Governor in Council (Cabinet) based on a recommendation from the Minister.
WestJet and Sunwing operate two of Canada’s four largest integrated tour operators providing vacation offerings to Canadians. They are the two largest operators to sun destinations from Western Canada.
On May 20, 2022, the Minister of Transport started a public interest review of the proposed merger under subsection 53.1(5) of the Canada Transportation Act (CTA). 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.
Under the CTA, the Commissioner is also to provide an assessment to the Minister of the adequacy of any undertakings that may be proposed by the merging parties to address competition concerns raised in his report.
To assess the likely competitive effects during a period of industry uncertainty, the Bureau’s conducted a forward-looking analysis using data and information collected prior to and during the COVID-19 pandemic.
The Bureau recognizes that, since early 2020, the impact of the pandemic on the Canadian airline industry has been significant and it continues to result in disruption in the relevant markets. There are currently signs of recovery in upcoming seasons, and leisure travel (including to sun destinations) is expected to lead the recovery in demand.
This is the third time the Commissioner has provided a report to the Minister as part of a public interest review as it relates to national transportation.
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The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. Competition drives lower prices and innovation while fueling economic growth.
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