Air Canada today filed an application with the Federal Court of Canada seeking a declaration that the current Section 47 Order and any subsequent Order made under the Canada Transportation Act does not exempt the Onex-American Airlines Bid from merger review under the Competition Act. While Onex and American Airlines acknowledge that their Bid requires anti-trust clearance in the United States and Europe, the Bid suggests that the proposed merger does not require approval under Canada`s Competition Act. It only refers to the issuance of a Section 47 Order under the Canada Transportation Act on terms satisfactory to Onex-American Airlines. Air Canada has taken this action today because the limitation period to initiate an application respecting an order-in-council is within 30 days of the Order`s effect.
“The Section 47 Order was issued by the Governor in Council to permit interested parties to develop, assess and discuss proposals and to negotiate and possibly enter into conditional agreements free from any constraints under the Competition Act. It was not issued to exempt unsolicited takeover bids or any other merger transactions from merger review under that Act,” said Doug Port, Senior Vice President, Corporate Affairs and Government Relations.
“Moreover, the Onex lock-up of American and Canadian, coupled with American`s absolute veto over any deal it doesn`t like, effectively means that no other conditional agreement respecting Canadian is possible and therefore, other proposals cannot be brought forward under the Section 47 Order other than the Onex-American Airlines deal. The Onex-American Airlines Bid makes a mockery of the Section 47 process as well as the merger review provisions of Canada`s Competition Act,” added Port.
Port summarized, “Air Canada`s action is consistent with its determination to enhance shareholder value and to ensure that all proposals designed to reshape Canada`s airline industry are considered on a level playing field. Our shareholders will not be steamrolled into a transaction that seeks to improperly avoid merger review under the guise of reshaping the industry.
“Our shareholders are entitled to the benefit of all alternatives that may be brought forward and they must know, prior to tendering their shares into any bid, the scope and timing of any merger review related to such bid as well as whether the bid has been approved from a regulatory standpoint without compromise. In addition, from a value standpoint, they must know whether any conditions could be imposed that could diminish the value of the transaction to them.
“The Onex-American proposal and its impact on our shareholders and the travelling public should be subject to the full review of the Competition Bureau as would apply to any merger proposal that might come forward,” he added.