The European Commission has approved the merger of Korean Air with Asiana Airlines, subject to certain conditions.
The European Commission launched an investigation into the merger in February 2023 and raised objections in May of the same year in relation to competition issues in the passenger and cargo air transport services markets, in particular between Seoul and Barcelona, Paris , Frankfurt and Rome.
The Commission stated:
“Korean Air and Asiana compete head to head in transporting cargo and passengers between the EEA and South Korea. Together, they would have been by far the largest airline on these routes, eliminating a major alternative for customers. Other competitors face regulatory and other barriers to expanding their services and are unlikely to have exerted sufficient competitive pressure on the merged company. “This would likely have led to increased prices or decreased quality for passengers and cargo customers.”
To address such concerns and “maintain a competitive environment in relevant markets,” Korean Air has now agreed to the following commitments:
1. The divestment of Asiana Airlines' cargo transportation business. The press release states that Korean Air will need to appoint an advisory company, start the bidding process and select a buyer for the cargo business. It will then need to obtain approval of the selected buyer from the European Commission, with the Commission adding that the buyer “must be able and have the incentives to operate the divested business viably and compete effectively with the merged company.”
2. Providing support to rival airline T'Way on the four overlapping passenger routes between Korea and the European Union. This support will include slots, traffic rights and access to the required aircraft. Korean Air will not complete the merger until T'Way begins operating services from Seoul to Paris, Rome, Barcelona and Frankfurt.
The European Commission commented:
“These commitments fully address the competition issues identified by the Commission. After collecting feedback from customers and competitors during a market test of the proposed commitments, the Commission concluded that the commitments preserve effective competition in freight and passenger transport between South Korea and the EEA.”
This means that Korean Air has obtained approval or completed the review process with 13 of the 14 regulatory authorities that require business combination approvals, and is now only awaiting approval from the US competition authority.
koreaair.com
