US Department of Justice to File Lawsuit to Block Korean Air's Acquisition of Asiana Airlines

Concerns Over Reduced Competition on Domestic Routes in the US

The U.S. Department of Justice is reportedly considering filing a lawsuit to block Korean Air's acquisition of Asiana Airlines.

The U.S. online media outlet 'Politico' reported on the 18th (local time), citing three anonymous sources. According to the outlet, the Department of Justice is concerned that if Korean Air acquires Asiana Airlines, it could harm competition in passenger and cargo transportation between the U.S. and South Korea. However, no final decision has been made yet on whether to actually file a lawsuit.

Additionally, a source told the outlet, "The Department of Justice may ultimately decide to take no action."

Since both Korean Air and Asiana Airlines are headquartered in South Korea, the U.S. Department of Justice does not have legal jurisdiction. However, Politico explained that if the merger negatively affects competition in the U.S. aviation industry, the department could seek ways to block the corporate merger.

The Department of Justice has been investigating since November 2020, when Korean Air announced its acquisition of Asiana Airlines. It is particularly concerned that overlapping routes operated by the two airlines within the U.S. could harm competition if merged.

Passenger aircraft of Korean Air and Asiana Airlines parked at Incheon International Airport [Image source=Yonhap News]

Both airlines operate routes to U.S. cities such as New York, Los Angeles, San Francisco, and Seattle.

If the Department of Justice files a lawsuit, it would be the first case in which the U.S. government takes action to block a merger between foreign airlines.

The Department of Justice has intervened several times in mergers involving domestic airlines. In March, it filed a lawsuit in the Massachusetts federal court against the acquisition of Spirit Airlines, a low-cost carrier (LCC), by another LCC, JetBlue.

Also, in the fall of 2021, it filed a lawsuit to block a domestic alliance between JetBlue and American Airlines.

Korean Air must obtain merger approvals from four competition authorities: the U.S., the European Union (EU), the United Kingdom, and Japan. Earlier, on March 1, the UK Competition and Markets Authority (CMA) approved the merger.

Meanwhile, the EU competition authority issued an Objection Statement (OS) on the 17th, stating that "the acquisition of the two companies could limit competition in the passenger and cargo transportation markets between the European Economic Area and South Korea," and announced interim investigation results.