May 18 (Reuters) – The U.S. Department of Justice is considering filing a lawsuit to block Korean Air (003490.KS)’s planned acquisition of Asiana Airlines (020560.KS), Politico reports. mentioned Thursday.
The US Department of Justice has been investigating the November 2020 deal for about two years, and is concerned it will harm competition on overlapping routes to the US, the report said, citing three people familiar with the deliberations.
In response to the report, Korean Air said the Ministry of Justice has not made any official decision, adding that the South Korean airline will continue its dialogue with the US government until a final decision is made.
“Korean Air has made and continues to make every effort to obtain all necessary approvals,” the company said in a statement to Reuters.
A spokesman for the Ministry of Justice declined to comment.
The US administration is concerned that the merger will put too much control over the transfer of key goods such as electronic chips into the hands of a single company, the report said, adding that no decision has been made on whether to file a lawsuit.
European Union antitrust regulators said on Wednesday that Korean Air’s proposed takeover of rival Asiana could reduce competition in passenger and cargo air services between Europe and South Korea.
The merger of South Korea’s No. 1 and No. 2 airlines will see Korean Air become the largest shareholder of heavily indebted Asiana. The deal was arranged by Asiana creditors led by the state-run Korea Development Bank in 2020.
It’s too early to tell what the US and EU will decide, analysts said, but South Korean regulators agreed to the merger on the condition that the combined company give up its flights to other airlines on routes where it has a significant market share.
Analysts added that the UK’s competition authority had made a similar case when it approved the merger in March.
“The merger would be beneficial for cost reductions and economies of scale, but there is also a reduced market share expected from regulators’ requirements,” said Seho Bae, an analyst at HI Investment & Securities.
The Biden administration has taken a hard line on airline consolidation.
In March, the Justice Department filed a lawsuit to block JetBlue Airways Corp. (JBLU.O) from buying Spirit Airlines Inc. (SAVE.N), saying the planned $3.8 billion merger “would result in higher fares and fewer seats, hurting millions of consumers in the world.” Hundreds of ways. The trial is set for October.
The department also filed a lawsuit asking the judge to force JetBlue and American Airlines (AAL.O) to cancel their Northeast Alliance. The companies are waiting for a decision after last year’s trial.
Additional reporting by Kanjik Ghosh in Bengaluru; Editing by Leslie Adler
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