What is the FTC’s choice in promoting the Korean Air-Asiana merger?

Asiana weighs on the indemnity in the matter of ‘impossibility of regeneration’

Since Hanjin Group, which has Korean Air as a subsidiary, is promoting the acquisition of Asiana Airlines, it is also controversial whether it passes the Fair Trade Commission’s review of the business combination. Inevitable to report a monopoly if Korean Air and Asiana Airlines, which are the first and second largest in Korea, are unavoidable, but the direction of M&A (corporate mergers and acquisitions) can be different depending on how the FTC judges the possibility. shooting of Asiana Airlines.

According to the government and the aviation industry on the 15th, the merger and acquisition of Korean Air-Asiana Airlines is confirmed and, once the Hanjin group submits a report, the FTC plans to seriously begin the process of reviewing the business combination. When conducting M&A transactions under the Fair Trade Act, if the reporting company’s total assets or sales exceed 300 billion won or more than 30 billion won in the previous year, they must obtain Fair Trade Approval Trade Commission.

When Hanjin embraces Asiana, a dinosaur company will be born in the national aviation market. At the end of last year, Korean Air’s domestic market share was 22.9% and Asiana 19.3%. The combined market share of low cost carriers (LCCs) owned by both companies such as Jin Air, Air Busan and Air Seoul is 62.5%.

The FTC may prohibit a merger if it determines that the merger will hinder competition with the market monopoly and dominant business entity. However, as the government is actually helping Hanjin take over Asiana Airlines to restructure the aviation industry, the chance of an FTC rejection is low.

If the FTC does not allow business combinations of companies that are unlikely to recover, the FTC may allow M&A transactions, even if market competition is limited due to concerns about economic damage. In April, the Fair Trade Commission approved Jeju Air’s acquisition of Eastar Jet with the same logic. The Fair Trade Commission gave way to Hyundai Motor to acquire Kia Motors in 1999 during the financial crisis.
/ Sejong = Kim Woo Boja [email protected]