KUALA LUMPUR: The Malaysian Aviation Commission (Mavcom) has approved the merger between Korean Air Lines Co Ltd and Asiana Airlines Inc.
Mavcom said as the merger involved the air passenger services between South Korea and Malaysia, Korean Air and Asiana had submitted a Voluntary Notification and Application of an Anticipated Merger to the commission on March 19.
The anticipated merger also constitutes a “failing firm defence” merger as Asiana 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 the merger did not infringe section 54 of the Malaysian Aviation Commission Act 2015 [Act 771], which bars any merger that results in the Substantial Lessening of Competition (SLC) of the aviation industry.
This decision is the first competition-related merger case to be analysed by any competition authority or sector regulator in Malaysia.
Mavcom executive chairman Datuk Seri Saripuddin Kasim said since its inception in 2016, the commission had stood strong as an internationally-recognised regulator of economic and consumer-related affairs for the aviation services industry.
“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 Lines and Asiana Airlines takes into full consideration the information and feedback presented by all parties and the Commission’s own research and analysis.
“This merger decision highlights that Part VII: Competition of Act 771 is on 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’s post-merger market share of one direct route between Seoul, South Korea and Kota Kinabalu, Malaysia would be higher, the merger would not cause any unilateral effects or act as a barrier to entry and expansion for the related markets.
Additionally, Mavcom found that the merger would result in significant economic efficiencies and social benefits.
This includes improved safety, reduced training costs, as well as efficiencies related to maintenance, repair and overhaul.
Source: New Straits Times
