Investigation into Korean Air acquisition of Asiana Airlines halted

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

European antitrust regulators have temporarily halted their investigation into Korean Air Lines' proposed acquisition of Asiana Airlines after the county's largest carrier asked for a delay to prepare remedies addressing competition concerns.

Industry insiders believe the process will be delayed for about two months taking into account the summer holiday period, though neither the European Commission (EC) nor Korean Air disclosed the exact extended deadline.

"In our efforts to refine the proposed remedies, we have held discussions with the EC to negotiate an extension for the merger review deadline, and the prolongation of the review period has been decided," Korean Air said in a statement on Thursday.

The EC's website confirms that the deadline has been suspended from June 23.

The European Union watchdog had entered Phase 2 of the merger review. Initially, the deadline for reaching a conclusion was set for Monday.

However, during the investigation, the EC raised concerns and issued a Statement of Objections to Korean Air last month, stating that the merger could “reduce competition in the provision of passenger transport services on four routes between Korea and France, Germany, Italy and Spain,” and “reduce competition in the provision of cargo transport services between all of Europe and Korea.”

Korean Air and Asiana Airlines held significant combined market shares on the mentioned routes, including 60 percent of Incheon to Paris, 68 percent to Frankfurt, 75 percent to Rome, and 100 percent to Barcelona as of 2019.

In response to previous concerns raised by Britain's antitrust authorities regarding market monopoly, Korean Air transferred seven slots to U.K.-based Virgin Atlantic. Additionally, for China, Korean Air agreed to transfer slots on key Chinese routes, such as Beijing, Shanghai, Guangzhou, and Tianjin.

Experts say that the delay in the merger by the EU does not necessarily indicate a negative outcome.

“The fact that Korean Air took the initiative to request the postponement underscores their strong dedication to the merger,” said Hwang Yong-sik, a business professor at Sejong University.

“If the EC were to veto the merger, they would have done it now,” Hwang said. “From my view, the acceptance for the extension request signifies that they would thoroughly review the remedial measures and progress towards conditional approval.”

In 2021, Korean Air submitted acquisition approval documentation to antitrust regulators in 14 countries. To date, it has obtained approval from 11 countries, including the U.K., Australia, Singapore, Vietnam, Turkey, and China.

Final decisions from the EU, the United States, and Japan are still pending, and failure to secure approval from any one of these jurisdictions could potentially lead to the merger being scrapped.

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