Belgium, (Brussels Morning Newspaper) The European Commission has launched an investigation into Korean Air’s planned acquisition of Asiana Airlines.
In a statement released on Friday, the EC pointed out that Korean Air is the largest airline in South Korea and Asiana Airlines is the second largest.
The Commission expressed concern that “the transaction may reduce competition in the markets for passenger and cargo air transport services between the European Economic Area (EEA) and South Korea.”
Both airlines operate domestic and Asian routes as well as long-haul routes to other countries, with the EC stressing that its preliminary investigation shows the two companies “are strong and close competitors in the provision of passenger and cargo air transport services between the EEA and South Korea.”
The body warned that the acquisition could have negative effects on competition, pointing out that the airlines are the only companies offering direct flights between South Korea and two EEA destinations.
EC’s concerns
It stressed that competitors may be unable to exert enough competitive pressure on the new entity, which would “eliminate potential competition in passenger transport services between South Korea and the EEA.”
European Commissioner for Competition Margrethe Vestager noted that “Korean Air and Asiana are close competitors and the two leading airlines that transport passengers and cargo between Europe and South Korea.”
“With our in-depth investigation, we will ensure that the acquisition of Asiana by Korean Air does not impede competition and will not lead to higher prices, less capacity or lower quality for passengers and cargo air transport services,” she concluded.
The EC pointed out “it is unlikely that Asiana and Korean Air would stop competing or be significantly less competitive absent the transaction,” reiterating that the planned acquisition could harm competition.
The body stressed that the launch of an in-depth investigation “does not prejudge the outcome of the investigation” and added that it will decide on the matter in 90 days.
The Commission reminded that it is responsible for preventing concentrations that would have negative effects on competition “in the EEA or any substantial part of it” and pointed out that a large majority of planned mergers are approved after routine reviews.
