Violation of Corrective Measures Imposed with Business Combination Approval from the First Year
Asiana Airlines has been fined 12.1 billion won in enforcement penalties by the Fair Trade Commission (FTC) for violating the "fare increase cap" condition imposed as part of its business combination approval with Korean Air. The corporation has also been referred to the prosecution.
On August 3, the FTC announced that it would impose an enforcement penalty of 12.1 billion won on Asiana Airlines for violating the corrective measure prohibiting the "exceeding of the average seat fare increase cap," which was imposed as a condition for the business combination with Korean Air.
According to the FTC's investigation, Asiana Airlines exceeded the fare increase cap set by the FTC when it gave final approval for the business combination with Korean Air in December of last year, and overcharged fares by 680 million won in just the first quarter of this year.
At the time of the business combination approval at the end of last year, the FTC established a fare increase cap (2019 average fare plus inflation rate) to prevent the large airline from abusing its dominant market position to excessively raise fares.
However, in just the first quarter of this year, which was the first year of implementation, it was confirmed that the fare increase cap was exceeded by 1.3% to 28.2% on four routes: Incheon-Barcelona, Incheon-Frankfurt, Incheon-Rome, and Gwangju-Jeju.
At a plenary meeting held on July 23, the FTC examiner recommended a total enforcement penalty of 100.8 billion won and the referral of both the CEO and the corporation to the prosecution.
However, the FTC partially accepted the company's explanation that the excessive fare charges were due to a "management system error," significantly reducing the enforcement penalty and excluding the CEO from the prosecution referral.
The 12.1 billion won enforcement penalty imposed this time is the largest since the introduction of the enforcement penalty system related to business combinations.
The FTC stated, "Asiana Airlines failed to comply with one of the core corrective measures imposed as part of the business combination from the very first implementation period," and added, "The compliance period for the corrective measures is until the end of 2034, and we plan to monitor compliance even more closely."
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