Korean Air Gets Approval from European Commission on Asiana Merger

The European Commission on Tuesday approved, under the EU Merger Regulation, Korean Air’s proposed business combination with Asiana Airlines.

According to an announcement by Korean Air, the approval comes in the form of conditional clearance, which is subject to the airline’s compliance with certain commitments agreed upon with the Commission.

Approval of the Korean Air-Asiana merger follows an in-depth investigation of the proposed acquisition by the Commission.

Korean Air is South Korea’s largest airline offering international air passenger and cargo services. Asiana, the second largest airline in South Korea, provides similar services. Both airlines have a significant presence in the European Economic Area (EEA).

Korean Air initiated a pre-consultation process with the Commission in January 2021, followed by the submission of a formal merger notification in January 2023. The Commission opened a Phase II review of the merger in February, and issued a Statement of Objections in May in which it expressed competition concerns resulting from the merger in both passenger and cargo markets.

Conditions

To address the identified competition concerns, commitments have been offered, primarily consisting of two elements:

– divestment of Asiana Airlines’ cargo freighter business, and
– providing support to ensure the entry by a new airline on the four overlapping passenger routes between Korea and the European Union (Seoul Incheon-Paris, Seoul Incheon-Rome, Seoul Incheon-Barcelona, and Seoul Incheon-Frankfurt).

The measures are designed to maintain a competitive environment in the relevant markets.

For the implementation of the cargo commitments, Korean Air and Asiana Airlines will need to take several steps, such as appointing an advisory firm to oversee the divestment of Asiana Airlines’ cargo freighter business, as well as initiating the bidding process, and selecting a buyer of the cargo business. The approval by the Commission of the selected buyer is required to close the airlines’ merger deal. Once Korean Air completes the acquisition of Asiana Airlines, the actual cargo divestment process will take place.

Under the passenger commitments, T’way Air has been appointed as the “remedy taker” on the designated European passenger routes. Starting from the second half of this year, T’way Air will gradually initiate operations on the four overlapping passenger routes. Korean Air plans to provide comprehensive support to T’way Air.

Vestager: Korean Air’s remedies will ensure fair competition

In a statement, Margrethe Vestager, the Commission’s Executive Vice-President in charge of competition policy, said that the remedies of Korean Air effectively address the EU’s concerns, and will “ensure fair competition and consumer choice in this vital sector”.

With the Commission approval secured, Korean Air continues to be focused on its discussions with the United States competition authority to finalize the overall merger review processes as soon as possible.

Since January 2021, Korean Air has filed merger notifications to a total of 14 competition authorities. To date, a total of 13 authorities have since either approved the merger or concluded the review of the merger on the ground that the merger was not subject to review or report.

Danae Airlines S.A. is the GSA (General Sales Agent) of Korean Air for Greece.