Government Of Canada Confirms Merger Review Would Apply To Any Merger Or Acquisition Transaction In

Air Canada announced today that in the Federal Court of Canada Section 47 proceedings, the Government of Canada has confirmed that the proposed ONEX/American Airlines merger of Air Canada and Canadian Airlines must be submitted to full Competition Bureau Review.

The position of the Government of Canada makes clear that any approval under the Section 47 Order could not have the effect of exempting a merger or acquisition agreement forever from the application of the Competition Act. This means that any merger transaction would be subject to merger review at the end of the 90-day period contemplated by the Section 47 Order and that any approval by the Minister of Transport during the 90 days would cease to have any binding legal effect beyond the 90th day.

“We are delighted that the Government of Canada shares Air Canada`s views that the competition laws of Canada cannot be abrogated on a permanent basis through this section 47 process,” said Doug Port, Senior Vice President, Corporate Affairs and Government Relations.

“We always believed that the intent of the Section 47 process was never to permanently exempt merger or acquisition transactions from review as required by law but rather to permit the major airlines to engage in discussions and develop proposals for the restructuring of the Canadian airline industry.” Port added, “Given the Government of Canada`s position, it is no longer necessary to pursue the action in the Federal Court.”