South Korea’s Fair Trade Commission has given final approval for the business combination of Korea Railroad Corporation (KORAIL) and SR, determining that the merger is unlikely to restrict competition.
KORAIL was established in 2005 with full government investment and primarily operates passenger and freight rail transport services. SR was established in 2013 and began operations in 2016. It was designated a quasi-market-type public enterprise in 2019 and operates high-speed passenger rail services, including the SRT high-speed trains.
On a round-trip basis, the two companies operate overlapping services on 155 of the country’s 433 high-speed rail routes. Fares may not exceed the ceiling set and publicly announced by South Korea’s Minister of Land, Infrastructure and Transport, and any changes must be accepted by the minister. As a result, fares cannot be arbitrarily raised after the integration. Changes to business plans concerning seat capacity, including operating sections and service frequencies, as well as changes to railway business terms and conditions related to services, also require the minister’s approval or acceptance.
Under the business plan for the three years following the integration, fares on existing KTX routes will be reduced by 10% to match SRT fare levels. Total seat capacity across all routes will be increased by more than 17,000 seats on weekends, while service frequencies will increase by at least 25 operations. For mileage points, SRT passengers will be able to accrue 5%, as is currently the case with KTX. Other services, including discount programs and commuter passes, will also be operated on an integrated basis.
The Ministry of Land, Infrastructure and Transport and the Fair Trade Commission have signed a memorandum of understanding aimed at establishing a fair market order in the high-speed passenger rail market and protecting consumer interests. For three years after the integration, they will jointly review the implementation of business plans concerning fares, seat capacity, and services.
Following this approval, the Ministry of Land, Infrastructure and Transport will proceed with procedures including approval for the transfer of business operations, with the merger of the two companies scheduled to be completed in September.
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This article was generated using automatic translation by GPT-4 API. The translation may not be accurate.
