The European Commission has given the green light to Korean Air Lines' acquisition of Asiana Airlines, following a comprehensive investigation. However, the approval is contingent upon certain conditions being met.
According to a European Commission press release, both Korean Air and Asiana Airlines - South Korea's largest and second-largest airlines respectively - offer passenger and cargo services. Both airlines also have a significant presence in the European Economic Area.
The European Commission press release revealed that after an extensive investigation into the proposed acquisition, which involved gathering information and feedback from market participants and other stakeholders, the commission expressed concerns that the deal could negatively impact competition in air cargo services between Europe and South Korea. The commission was also apprehensive about potential adverse effects on passenger air transport services on routes between Seoul and some European destinations, notably Barcelona, Paris, Frankfurt, and Rome.
The investigation disclosed that the two airlines were essentially competing head-to-head in both cargo and passenger categories. "Together, they would have been by far the largest carrier on these routes removing an important alternative for customers. Other competitors face regulatory and other barriers to expand their services and would have been unlikely to exert sufficient competitive pressure on the merged company. This would likely have led to increased prices or decreased quality for passengers and cargo customers," stated the commission in its press release.
To address these concerns raised by the commission, Korean Air proposed several remedies according to another statement from the European Commission press release. Firstly, Korean Air will divest Asiana's global cargo freighter business, which includes freighter aircrafts, slots, traffic rights, flight crew along with other employees as well as its customer cargo contracts. The buyer of this divested business will need approval from the commission and must operate it in a manner that allows competition with the merged airline. Secondly, Korean Air will provide T’Way - another South Korean airline - access to assets such as slots, traffic rights and necessary aircrafts so it can commence flight operations on four overlapping routes. Korean Air has agreed to complete the acquisition only after T'Way has started operating on these four routes.
"The Commission therefore concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with these commitments," the commission declared in its press release.
