KOREAN Air Lines’ US$1.4 billion bid for smaller rival Asiana Airlines won approval from the European Union, moving the deal one step closer to reality after the firms offered to address concerns raised over competition.
The European Commission said on Tuesday (Feb 13) that Korean Air Lines’ offer to sell part of Asiana’s cargo business, as well as to enable entry for competitors on certain passenger routes between South Korea and Europe, was enough to smooth the passage of the deal to approval.
The commission’s nod moves the deal close to completion, after it recently obtained regulatory approval from the Japanese competition authority. The merger still requires regulatory approval from the United States, which isn’t expected to raise any serious concerns after Korean Air’s most recent remedy package signed with the EU.
“With the EC approval secured, Korean Air continues to be focused on its discussions with the US competition authority to finalise the overall merger review processes as soon as possible,” the carrier said in a statement. Since 2021, 13 of the 14 competition authorities who Korean Air flagged the deal to have given their approval, it added.
Under the agreement forged between Korean Air and the EU’s merger regulators, the airline will need to find a suitable buyer for the cargo divestment. Korean Air will also give rival airline T’Way the necessary assets to enable it to provide flights on routes between Seoul and Barcelona, Paris, Frankfurt, and Rome.
EU competition commissioner Margrethe Vestager said that the remedies address the commission’s concerns and will “ensure fair competition and consumer choice in this vital sector.”
The Brussels-based regulator had earlier warned that the deal could thwart competition on routes between South Korea and France, Germany, Italy and Spain, as well as distort competition on the market for cargo transport services between South Korea and the EU.
The proposed deal was announced in 2020 and was an attempt by Korean Air parent Hanjin Kal to stabilise South Korea’s aviation industry during the coronavirus pandemic. Hanjin Kal said at the time it expected Korean Air to be ranked as one of the world’s top 10 airlines once the deal completes.
The European Commission is also examining other deals in the airline industry, including between Deutsche Lufthansa and Italy’s ITA Airways, as well as IAG’s 400 million euro (S$580.1 million) purchase of Spanish airline Air Europa. BLOOMBERG