U.S. Justice Department may sue to block Korean Air-Asiana deal

Korean Air and Asiana Airlines planes are parked at Incheon International Airport on Thursday. [YONHAP]

The U.S. Justice Department may sue to block Korean Air's proposed acquisition of Asiana Airlines over concerns about its impact on airline competition.

The news comes a day after the European Commission sent its "statement of objections" to Korean Air.

On Thursday, sources familiar with the matter told Politico, a Washington-based news outlet, that the Justice Department might file a suit to impede the planned merger as it worries the acquisition may hinder competition in passenger and cargo traffic between Korean and the United States.

However, decisions have yet to be made on whether to file a suit, and nothing is imminent, Politico reported.

"The Department of Justice could ultimately not take any action," according to sources Politico quoted.

In 2021, Korean Air submitted documentation for the approval of acquisition to antitrust regulators in 14 countries. So far, it has obtained approval from 11 countries, including Britain, Australia, Singapore, Vietnam, Turkey and China.

The European Union, the U.S. and Japan have not yet made a final decision.

The merger could be scrapped if it fails to win approval from any one of these three countries.

While the U.S. Justice Department does not have jurisdiction over the companies' conduct inside Korea, it still can consider actions aimed at blocking their corporate merger based on its potential adverse effects on competition within the States, Politico wrote.

The Justice Department is concerned that the merger between Korean Air and Asiana Airlines will limit competition on overlapping routes to the U.S., according to the sources.

The two flag carriers have five overlapping routes to the U.S. — San Francisco, Los Angeles, Seattle, New York City and Honolulu.

These routes have raised monopoly concerns as their combined market share on these routes ranges from 78 percent to 100 percent. With the exception of Delta Air Lines, Korean Air's joint venture partner, there are no other airlines or only one other airline flying these routes.

In response, Korean Air stated that the likelihood of a lawsuit has "not been confirmed at all" and that the U.S. media outlet merely brought up the possibility.

"The US DOJ has not made any official decision," Korean Air said in a statement released on Friday.

"At the last meeting with the DOJ on May 12, Korean Air learned that the authority has yet to take a position nor have a confirmed timeline," it said. "Korean Air and the DOJ will continue the dialogue until the final decision is made by the DOJ."

The national flag carrier added it will actively appeal to U.S. regulators that the merger between the two airlines will not impede competition in the local aviation market.

"Korean Air [will emphasize] that the majority of the customers on the affected routes are Korean nationals and that the airline fully complies with a robust and comprehensive set of remedies ordered by the Korea Fair Trade Commission," it said.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]