WestJet's Sunwing deal likely to raise 'substantial' competition issues

MONTREAL (Reuters) - WestJet Airlines' planned purchase of leisure rival Sunwing would likely have "substantial anti-competitive effects" on sales of vacation packages, including higher prices and less choice, Canada's Competition Bureau said on Wednesday.

Calgary-based WestJet, which is owned by private equity firm Onex Corp ONEX.TO, said in March it would buy Ontario-based Sunwing and the travel booking website Sunwing Vacations.

The deal would reduce competition from the "only two carriers and integrated tour operators offering vacation packages through direct service on 16 routes between Canada and Mexico or the Caribbean," the Competition Bureau said in its report to the Ministry of Transport.

"It would also likely result in a significant reduction in travel by Canadians on a variety of routes where their existing travel networks overlap," it added.

Transport Canada has until December 5 to complete its public interest assessment of the deal.

The report said the two airlines account for about 37% of non–stop capacity between Canada and sun destinations and 72% of non–stop capacity between Western Canada and sun destinations, or warm countries during the winter.

Sunwing said in a statement that the routes identified as a concern in the report are predominantly in Western Canada, seasonal and account for just over 10% of all seats.

The report is advisory and non-binding, WestJet said in a statement.

(Reporting By Allison Lampert in Montreal; Editing by Mike Harrison)