The Biden administration, in conjunction with the DOJ, is mulling a suit against Korean Air to stop a merger with Asiana Airlines, which may violate antitrust laws; and potentially harm passenger and cargo traffic between South Korea and the US. This news is according to information from three sources knowledgeable in present-day deliberations between the two countries.
The deal in question has been in the works since November 2020, with the Department of Justice investigating it ever since. If any litigation were to take place, it would mark the third time the U.S. has intervened in mergers deemed to be monopolistic in the recent past. The first two are a proposed merger between JetBlue Airways and Spirit Airlines; and JetBlue Airways and American Airlines. However, Korean Air is owned and run in South Korea, with the South Korean government backing the deal, despite the Korean antitrust regulator objecting to the argument that the deal was done to save Asiana Airlines from insolvency.
The Korean government’s involvement could create multiple hurdles in the way of the U.S having a say in how the company is run, as the merger could be protected by the Act of State Doctrine, which bars U.S courts from officially ruling on actions of foreign governments, provided those actions are within their own borders.
The two airlines in question connect to multiple areas of the U.S., including San Francisco, Los Angeles, Seattle, New York City, and Honolulu. The U.S. believes that the merger would harm competition on overlapping routes with other airlines.
South Korean regulators have put stipulations on the merger as part of the approval process, restricting the airlines from flights in territories where other airlines have a large market share. However, countries still remain wary of the deal. The EU has chimed in, believing the merger could restrict competition in cargo and passenger air transport services to Barcelona, Frankfurt, Rome, and Paris.
The U.S. has also brought up concerns that the merger might harm supply chain resiliency, as the merger would largely put the transport of key goods, like microchips, in the hands of one company.
No official legal action has been taken, and the EU’s current opposition to the merger has bought the U.S. time before an official position must be taken.
