EU to Open Antitrust Probe into Korean Air Acquisition of Asiana

EU to Open Antitrust Probe into Korean Air Acquisition of Asiana

Korean Air Lines Company's bid to acquire smaller South Korean rival Asiana Airlines Inc. for 1.8 trillion won ($1.4 billion) faces an in-depth merger review in the European Union after regulators expressed antitrust concerns.

In November, 2020 the acquisition deal was announced and an attempt by Korean Air parent Hanjin Kal Corporation to stabilize South Korea's aviation industry amid the coronavirus pandemic. The parent corporation at the time said it expected Korean Air to be ranked as one of the world's top 10 airlines once the deal is completed.

The European Commission stated that it would open an in-depth probe under the European Union Merger Regulation into the proposed acquisition of Asiana Airlines Inc. by Korean Air Lines Company Ltd., as the acquisition may reduce competition in air transport between South Korea and the European Economic Area.

"The transaction could reduce competition in the provision of passenger transport services on four routes between South Korea and the EEA (European Economic Area)," the European Union competition enforcer said in a statement.

According to the Commission, which is the European Union's executive arm, the two companies are strong competitors in the provision of passenger and cargo air transport between the two areas. A merger would eliminate potential competition in passenger transport services between the European Economic Area and South Korea, while it would reduce competition in cargo transport services, according to the Commission.

The European Commission warned the deal "could eliminate potential competition in passenger transport services between the EU region and South Korea and that other firms may be unlikely to exert sufficient competitive pressure on the merged entity in cargo transport."

The EU probe, which was extended until July 5, is expected to ensure the takeover does not impede competition.

Margrethe Vestager, Executive Vice-President in charge of competition policy said, "we will ensure that the acquisition of Asiana by Korean Air does not impede competition and will not lead to higher prices, less capacity or lower quality for passengers and cargo air transport services."