The European Commission is having objections to the proposed acquisition of Asiana Airlines by Korean Air. Although it hasn’t made a final decision, the EC says in a Statement of Objections that the merger of the two airlines will reduce competition in the passenger and cargo market in certain countries. European Commission objects to Korean Air/Asiana merger.
Already in February, Brussels raised concerns about the proposed merger, which is pending since Korean Air formally announced the acquisition in November 2020. Since February, the European Commission has completed an in-depth investigation into the effects of the merger on competition. Specifically, if a combination of Korean Air and Asiana will restrict competition between Europe and South Korea. Korean Air intends to take a 63.9 percent share in Asiana.
The investigation concludes that the merger will result in reduced competition for passenger transport services on four routes between South Korea and France, Germany, Italy, and Spain. Competition in the provision of cargo transport services between all of Europe and South Korea will also be affected.
“Korean Air and Asiana compete head-to-head in carrying passengers and cargo between the EEA and South Korea. Together, they would be by far the largest carriers of passengers and cargo on these routes and the merger may remove an important alternative for customers,” the European Commission said in a media statement on May 17.
“Other competitors face regulatory and other barriers to expanding their services and may be unlikely to exert sufficient competitive pressure on the merged entity. The merger may therefore lead to increased prices or decreased quality of passenger and air transport services.”
Final decision in August
The EC says that the Statement of Objections is a formal step in an investigation and “does not prejudge the outcome of the investigation. Korean Air now has the opportunity to reply to the Commission’s Statement of Objections, to consult the Commission’s case file, and to request an oral hearing.” The Commission has until August 3 to make a final decision.
The acquisition proposal needs approval from various countries. Turkey, Taiwan, and Vietnam already granted mandatory approval in 2021, followed by South Korea in February 2022, and China in December 2022. The UK raised no objections in March. Mandatory approval from the US, European Union, and Japan is still pending.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News and until July 1 2023 in a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.