The Canadian tour operator Transat AT, which owns Air Transat (TS, Montréal Trudeau), has said it is studying a decision the European Commission made on May 25 to open an in-depth investigation to assess Air Canada's proposed acquisition of the company.

The flag carrier’s bid may result in less choice and higher prices for flights between Europe and Canada, EU antitrust regulators warned as they opened the full-scale probe of the transaction.

Specifically, the commission "is concerned that the proposed transaction could significantly reduce competition" on 33 city pairs, including 29 where both companies offer direct services and four where one company flies direct and the other indirect via one of its hubs, it said in a statement.

The deal, which Air Canada had hoped would boost its leisure business and help it compete with rival WestJet (WS, Calgary), still needs the approval of Marc Garneau, Canada's transport minister. The Canadian Competition Bureau said in March that it would probably result in a substantial reduction of competition in the sale of travel packages.

Adding to the complications, investors involved in the acquisition have expressed their own concerns over the CAD720 million Canadian dollar (USD518 million) price tag, arguing that given the current turmoil in the aviation industry the deal - first announced in May 2019 - should be renegotiated.

The EU competition watchdog said that other European carriers were merely distant competitors and that WestJet was not a sufficiently strong rival.

“This is a challenging time, especially in markets severely impacted by the coronavirus outbreak, but a return to normal and healthy market conditions must be based on markets that remain competitive,” Europe's competition commissioner Margrethe Vestager commented in the statement.

Acknowledging the commission’s decision, Transat said it had notified Air Canada that it had activated the first of three one-month extensions to the outside date set for the deal, from June 27 to July 27.

The European Commission now has 90 working days, until September 30, to take a decision. If the required approvals are obtained and the conditions satisfied, the deal is now expected to close early in the fourth quarter of 2020, Transat said. It had initially been anticipated to close early in 2020.