EU Begins Final Review of Korean Air-Asiana Merger

EU Plans to Make Final Decision in July

[Asia Economy Reporter Minyoung Kim] The European Union (EU) has entered the final review stage to decide on the corporate merger between Korean Air and Asiana Airlines.

On the 17th (local time), the European Commission announced on its website that it has launched an in-depth investigation into the Korean Air-Asiana merger.

Based on the merger notification submitted by Korean Air on the 13th of last month, the Commission conducted a Phase 1 (preliminary) review but decided that further examination was necessary, thus moving into the final Phase 2 review.

The European Commission explained that it is concerned the merger could reduce competition in passenger and cargo transport services between the European Economic Area (EEA) and South Korea.

Since Korean Air and Asiana are the first and second largest airlines in South Korea, there are concerns that competition in passenger transport services on four routes between South Korea and the EEA could weaken after the merger. Related foreign media, citing multiple sources, reported that the four routes under scrutiny are Paris, Frankfurt, Rome, and Barcelona. As of 2019, Korean Air and Asiana’s market shares on these routes were 60% for Incheon-Paris, 68% for Frankfurt, 75% for Rome, and 100% for Barcelona.

According to the Commission, during the Phase 1 review period, neither Korean Air nor Asiana submitted any remedies. Korean Air explained that it did not submit remedies to facilitate an efficient review process. If remedies are submitted during Phase 1, the review period can be extended by 10 days.

Korean Air plans to submit remedies after consultations with the EU during the Phase 2 review process.

The Commission intends to conduct an investigation over 90 business days and make a final decision on whether to approve the merger by July 5. The Phase 2 review can last up to 125 days.

Previously, Korean Air, which has been pursuing the acquisition of Asiana since 2020, filed merger notifications in a total of 14 countries including South Korea. Currently, only approvals from four countries remain, including the EU, the United States, Japan, and the United Kingdom. If Korean Air fails to pass the EU’s Phase 2 review, the merger with Asiana will effectively become impossible regardless of approvals from other countries.