Bombardier, Boeing Set to Duel Over Anti-Dumping Allegations

In the latest of a number of recent NAFTA-related events between Canadian and U.S. companies, Boeing Co. (NYSE:BA) has accused rival Canadian plane-maker Bombardier, Inc. (TSX:BBD.B) of unfairly subsidizing the production of its CSeries planes, effectively nullifying Boeing’s ability to enter this market, and allegedly costing the American airplane manufacturer approximately $330 million per year in annual revenue.

The allegations have been formalized as a 90-day window has been proposed for Canada-U.S. NAFTA negotiations to begin. Boeing has petitioned the U.S. International Trade Commission and the U.S. Commerce Department to launch an investigation into the breadth of the purported subsidies provided by the Canadian federal and provincial governments to Bombardier, subsidies that Boeing asserts have enabled anti-competitive behaviour and predatory pricing on the part of Bombardier.

Bombardier has stated it will vigorously defend itself against these allegations. In its defense, the company’s lawyers have pointed out that Bombardier did nothing wrong in pricing its airplanes aggressively to get the large Delta order which has become the crux of the dispute, noting that their planes did not compete with Boeing’s, as Boeing’s product lines have focused on much larger long-haul airplanes than the ones requested by Delta. Bombardier lawyers also point to Boeing’s enviable backlog of products, suggesting that Boeing has not lost any revenue as a result of the alleged predatory pricing action by Bombardier.

With Bombardier currently under pressure from multiple sources at this point in time, I remain on the sidelines with this company until things begin to settle down.