EU warns Korean Air’s Asiana bid could limit competition

BRUSSELS, May 17, 2023 (AFP) – The EU said on Wednesday it feared the takeover by South Korean flag-carrier Korean Air of smaller troubled rival airline Asiana could restrict competition on routes between Europe and South Korea.

Korean Air in late 2020 said it would buy out Asiana for $1.6 billion at the time as the coronavirus pandemic wreaked havoc on the worldwide aviation industry, grounding planes.

The European Commission, the bloc’s powerful anti-trust authority, said it had sent a warning known as a “statement of objections”, a formal step in anti-trust probes, after opening an in-depth investigation in February this year.

The commission said it was concerned the bid could reduce competition in passenger transport services on four routes between South Korea and France, Germany, Italy and Spain, and in cargo transport services between all of Europe and South Korea.

Since Korean Air and Asiana “compete head-to-head in carrying passengers and cargo” between Europe and South Korea, the commission said in a statement that “the merger may remove an important alternative for customers”.

The takeover could also lead to higher prices or poorer quality of services, it warned.

The EU regulator must make a final decision by August 3 this year.

Korean Air said it was cooperating closely with the commission to address its concerns.

“Korean Air is confident that the proposed merger will benefit our customers in the market, and will make every possible effort to secure the final approval of the merger,” it added in a statement.