UK Effectively Approves Korean Air Merger... US Likely to Delay Beyond Year-End

[Asia Economy Reporter Choi Dae-yeol] The UK competition authority has accepted the remedial measures submitted by Korean Air regarding the Asiana Airlines merger. The aviation industry views this decision as a de facto approval. With the UK, a major European route, showing a positive response, the likelihood of additional approvals from the European Union (EU) and the United States has also increased.

According to the aviation industry on the 29th, the UK Competition and Markets Authority (CMA) stated on its website the previous day that "it has determined there is a reasonable basis to accept Korean Air's proposal (remedial measures)."

This decision by the CMA appears to be based on the judgment that Korean Air's remedial measures can alleviate concerns about restricting market competition.

On the 14th, during the interim review, the CMA requested Korean Air to submit measures to resolve the monopoly concerns, citing expected increases in airfare and declines in service quality due to the merger of Korean Air and Asiana Airlines. In response, Korean Air submitted additional remedial measures to address the UK's concerns.

As the CMA judged the content of the remedial measures to be sufficient, the final approval is expected to be decided without a second in-depth investigation. Only the procedure to gather additional opinions from the market regarding the remedial measures remains. The final approval decision will be announced soon. Korean Air stated, "We view this decision positively and will sincerely cooperate to ensure the UK competition authority's merger review concludes promptly during the remaining period."

The UK is a voluntary merger notification country. Although merger notification is not mandatory, Korean Air voluntarily reported it considering the possibility of future investigations by authorities. Since the UK has an aviation market similar to the mandatory notification country, the EU, approval by the UK is expected to positively influence the EU's review. Preparations are underway to submit the formal notification to the competition authorities after preliminary consultations began last year.

In the United States, another mandatory notification country, there is a possibility that the review will extend into next year. On the 16th, the US Department of Justice announced it would conduct additional reviews of the merger of the two companies. Similarly, it is reported that the focus will be on whether market competition is restricted after the merger. In Japan, preliminary consultations with the competition authority are in the final stages, and in China, the remedial measures are being revised and resubmitted for review.

Korean Air has notified mergers in a total of 14 countries, including South Korea, and has completed reviews in 9 countries either through approval or because they were not subject to review or notification. South Korea's Fair Trade Commission approved the merger on the condition that slots and traffic rights be transferred to other airlines and that fare increases be restricted.