Japan’s competition authorities approved the business combination of Korean Air (003490) and Asiana Airlines (020560). As a result, only the European Union (EU) and the United States remain in the Korean Air business combination review, which started four years ago targeting 14 countries.
According to the industry on the 31st, the Japanese Competition Authority (JFTC) announced on its website that it had “notified the merger parties that it will not issue a scrap order” regarding the corporate combination of Korean Air and Asiana Airlines.
“The JFTC concluded that, upon review, it could not be established that the proposed corrective action, if implemented, would substantially inhibit competition,” the JFTC explained. This means that if the corrective action plan is implemented, there will be no concerns about monopoly through restrictions on competition in the event of a merger.
With the approval of the Japanese competition authority for the business combination, only approval from the US competition authority is left. Previously, Korean Air had received approval from 11 of the 14 major countries excluding the EU, the US, and Japan. The EU announced that it would tentatively conclude the review by February 14th, and conditional approval is reportedly likely.
Unlike the Americas and Europe, where there were many concerns about the monopoly of Korean Air and Asiana Airlines, Japan is interpreted to have passed the corporate combination review relatively easily given that many domestic low-cost carriers (LCCs) have already entered the market. In the review of the business combination between the two companies in 2022, the Fair Trade Commission determined that the route with restrictions on competition is between Busan and Nagoya.
The business combination between Korean Air and Asiana Airlines began in November 2020 after HDC Hyundai Development Company’s acquisition of Asiana Airlines fell through. In the EU review, which was considered the biggest hurdle last year, the company passed the proposal and passed the sale of Asiana Airlines’ cargo division and the transfer of four major passenger routes to LCCs, moving rapidly toward the completion of the merger.
Korean Air also has a positive outlook on the final remaining review by U.S. authorities. Although it is difficult to disclose detailed progress due to confidentiality agreements signed with competition authorities, Korean Air explains that it is persuading the U.S. Department of Justice (DOJ) by imposing strong corrective measures from the Korea Fair Trade Commission and supporting the entry of new airlines.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.