The European Commission launched a full-scale probe into the proposed acquisition of indebted Asiana Airlines [020560:KS], the second-largest airline in South Korea, by the largest carrier Korean Air Lines [003490:KS], as reported by Reuters on February 17. The move follows a preliminary review indicating that the two major airlines are strong and close competitors in the provision of passenger and cargo air transport services between the European Economic Area (EEA) and South Korea. According to the commission, the deal could eliminate potential competition in passenger transport services between the EEA and South Korea. The commission is scheduled to decide by July 5 whether to approve or block the deal, and the deadline may be extended if the companies offer remedies to address the concerns of the EU.

Korean Air and Asiana dominated key routes between South Korea and major European cities. Last year, Korean Air has obtained conditional approval for the merger from South Korea’s antitrust watchdog, which required the airline to give up slots and traffic rights for 26 international and 14 domestic routes in the next 10 years if a newly competing airline requests them. However, if the European Commission disapproves of the acquisition, it will block the deal regardless of other countries’ decisions. In January 2022, the commission also blocked a merger between Hyundai Heavy Industries [267250:KS] and Daewoo Shipbuilding & Marine Engineering (DSME) [042660:KS], due to concerns that the deal would create a dominant position for the restructured company and reduce competition in the shipbuilding sector.

Sources:

https://www.reuters.com/markets/deals/eu-regulators-investigate-korean-airs-proposed-takeover-asiana-2023-02-17/

https://www.reuters.com/markets/deals/eu-regulators-probe-korean-air-asiana-deal-sources-2023-02-09/

https://www.kedglobal.com/airlines/newsView/ked202302200010