이 기사는 2021년 10월 05일 08:01 thebell 에 표출된 기사입니다.

Korean Air Lines’ takeover of Asiana Airlines, the biggest airline deal in the country’s history, has been pending approval from competition authorities for more than eight months, with criticism growing that the process is being delayed too much. But the country’s antitrust regulator said this is not a delay but a normal process.

Korean Air filed a regulatory application with the Korea Fair Trade Commission (KFTC) on January 14. According to the country’s law, the review process takes 30 days and can be extended to up to 90 days if necessary. However, this period is a time solely for review and the process can take 120 days or longer if additional information is requested by the regulator.

KFTC has continued to request more data concerning flight routes and market shares of the two airlines for the past months.

Criticism has emerged from industry insiders that the process is being delayed longer than expected, with more foreign regulators giving the green light to the deal. The combination of the two airlines is seeking approvals from competition authorities in 14 countries, and has so far received nods from Turkey, Thailand, Taiwan the Philippines and Malaysia.


In a rare move, Lee Dong-gull, chairman of the state-controlled Korea Development Bank (KDB), which effectively led the landmark deal, criticized KFTC’s cautious approach during a recent press conference, saying, “KFTC seems to be waiting for decisions from competition authorities in other countries, rather than making efforts to persuade them.”

KFTC has its own reasons. With the deal involving the country’s two largest full service carriers, there is a significant amount of data to be reviewed before deciding the deal’s impact on industry competition. Given the global nature of the airline industry, KFTC also needs to consider views of its overseas peers.

“Decisions are made separately in each country but consensus is needed to some extent,” an official at KFTC said. “We are continuously communicating with competition authorities in related countries to look into issues regarding flight routes where antitrust concerns can be raised.”

“The process is not being delayed. It normally takes a year or so for a deal that entails corrective measures.”

It is likely that KFTC will not rush into making a decision, industry watchers said, because any decisions from other key countries, such as the US, the European Union and China, that are different from the regulator’s one would complicate the situation.

On top of that, the deal is unlikely to be able to avoid antitrust scrutiny, with competition concerns raised over some of the two airlines' domestic and international routes.

It is said that KFTC is considering a conditional approval that could require Korean Air to turn in some of its slots. “We need active cooperation from Korean Air,” said the KFTC official.

A reduction in slots, awarded by the government, would have a direct impact on revenues. Korean Air has continued to make efforts to secure slots in the past years. “In the European Union, there have been antitrust cases where slots were returned. Korean Air would think that such a measure is an infringement of business rights,” a source from the airline industry said.

Different from Eastar Jet case

KFTC can give the green light to Korean Air regardless of competition concerns if Asiana Airlines is deemed inviable or there is no other option but to be acquired by Korean Air. That was the case with Jeju Air’s acquisition of Eastar Jet, although the deal ultimately fell through last year.

Korean Air may want to argue that its acquisition of Asiana Airlines falls under such exceptions, given that it is the only candidate to buy Asiana Airlines after the country’s six conglomerates all turned down KDB’s proposal of acquiring the indebted airline.

However, KFTC thinks that the execution rules cannot be applied to the deal because Asiana Airlines is still in operations and making profits. In contrast, Eastar Jet had suffered severe financial distress with a negative shareholders’ equity and no options to raise funds to stay in business.

“Requirements for a company to fall under such exceptions are very strict and such a decision also should be supported by antitrust regulators in all related countries,” said the KFTC official. “The Eastar Jet case was very exceptional.”

“We are actively cooperating with KFTC’s requests for additional data and clarifications,” an official at Korean Air said. (Reporting by Su-jin Yoo)