KUALA LUMPUR – The Malaysian Aviation Commission (Mavcom) today announced that it has approved a merger between Korean Air Lines Co (Korean Air) and Asiana Airlines.
As the merger involves the air passenger services between South Korea and Malaysia, Korean Air and Asiana Airlines submitted a voluntary notification and application of an anticipated merger to Mavcom on March 19.
The regulator noted that the anticipated merger constitutes a “failing firm defence” merger.
“Asiana Airlines has been in a situation of financial distress for some time and cannot be rehabilitated but for the anticipated merger.
“Upon thorough review of the application, Mavcom said that the merger does not infringe Section 54 of the Malaysian Aviation Commission Act 2015 (Act 771), which prohibits any merger that results in the substantial lessening of competition of the aviation industry,” it said in a statement today.
Mavcom said this decision is the first competition-related merger case to be analysed by any competent authority or sector regulator in Malaysia.
“As the only sector regulator in Malaysia with the function to decide on competition-related matters for anticipated mergers and mergers, our approval of the merger between Korean Air and Asiana Airlines takes into full consideration the information and feedback presented by all parties and the commission’s own research and analysis,” Mavcom executive chairman Datuk Seri Saripuddin Kasim said.
This merger decision highlights that Part VII: Competition of Act 771 is on a par with the international standards for competition laws, as well as Mavcom’s capacity and capability to undertake the relevant competition analysis work for mergers to ensure the continued protection and development of the Malaysian aviation sector, he said.
In its final decision, the commission concluded that while Korean Air and Asiana Airlines’ post-merger market share of one direct route between Seoul and Kota Kinabalu will be higher, the merger will not cause any unilateral effects or act as a barrier to entry and expansion for the related markets.
The commission also noted that passengers are able to exercise countervailing buyer power against these carriers due to the increase of online travel agencies and strict regulations by the Land, Infrastructure and Transport Ministry of South Korea, which prevents the merging parties from significantly raising prices.
Additionally, Mavcom found that the merger will result in significant economic efficiencies and social benefits, such as improved safety, reduced training costs, as well as efficiencies related to maintenance, repair, and overhaul, it said.
The final decision on the approved merger application can be found on Mavcom’s website at www.mavcom.my. – Bernama, September 9, 2021
