European competition regulators have conditionally cleared Korean Air’s proposed acquisition of compatriot carrier Asiana Airlines.
The European Commission states that its approval of the tie-up is conditional on “full compliance” with remedies offered by Korean Air to secure the deal – including selling Asiana’s freighter activities, and providing access to rival T’Way Air on passenger routes.
Its decision follows an in-depth investigation into the merger opened about a year ago.
The regulator had been particularly concerned about competition on passenger services between Seoul and a number of European cities – notably Paris, Frankfurt, Rome and Barcelona.
It also expressed an opinion that the Korean-European air cargo market would be adversely affected.
Korean Air-Asiana would have been “by far” the largest operator on the routes and the merger would have removed an “important alternative” for customers, the Commission states.
But Korean Air has offered to divest Asiana’s global cargo freighter business, including its aircraft, slots and traffic rights, as well as cargo contracts.
Korean Air will only be permitted to acquire Asiana once the Commission approves a suitable buyer for the cargo business.
“Among other requirements, the buyer must be able and have the incentives to operate the divested business in a viable manner and to compete effectively with the merged company,” the Commission says.
For passenger operations Korean Air will make assets available to allow competitor T’Way to start services on the four routes of specific concern. These assets will include aircraft, slots and traffic rights.
“These commitments fully address the competition concerns identified by the Commission,” says the regulator, adding that the concessions mean the tie-up no longer raises problems. An independent trustee will monitor implementation of the remedies.
