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. Last Updated: 07/27/2016

EU Opens Probe Into Canadian Air Takeover

BRUSSELS, Belgium -- European Union regulators have opened an in-depth probe into the proposed acquisition by Onex Corp. of Canada's two major airlines, Air Canada and Canadian Airlines, citing fears the merger will harm competition on transatlantic routes.

In a statement Monday, the European Commission said it was investigating concerns the merger would create a dominant position on direct flights between London and Canada, particularly since Onex plans to have Air Canada join the Oneworld alliance that already includes British Airways and Canadian.

"Oneworld would become the only alliance whose members serve London-Canada direct,'' the Commission said.

The decision to launch a full probe gives EU regulators four months to decide if the merger complies with EU antitrust laws.

"Alliances may well make life easier for the traveler. Yet only if alliances face head-on competition will their benefits come at a fair price,'' EU Competition Commissioner Mario Monti said.

Toronto-based Onex offered $1.2 billion in cash and stock and $2.7 billion in debt assumption to take over the Canadian carriers in August.

Although Canadian Airlines welcomed the offer, the larger Air Canada has charged the bid was a front for a takeover by American Airlines, whose parent, AMR Corp., is backing Onex.

AMR owns 25 percent of Canadian and would own 15 percent of the new airline, to be called New Air Canada.