South Korea's antitrust regulator said Thursday it has started to review a deal by Korean Air Lines Co., the country's biggest carrier, to buy the debt-ridden Asiana Airlines Inc.

The Korea Fair Trade Commission (KFTC) said it will see if the merger of the nation's two largest carriers could constitute a monopoly or hurt market competition as Korean Air submitted an application for approval earlier in the day.

In November 2020, Korean Air said it will acquire its smaller rival Asiana Airlines in a deal valued at 1.8 trillion won ($1.6 billion) that could create the world's 10th-biggest airline by fleets.

Industry watchers expect the takeover, if approved, will likely reshape the country's airline sector that has been reeling from the fallout of the COVID-19 pandemic.

But critics said the merger is feared to create a monopoly in the local airline industry.

Korean Air, currently the world's 18th-largest airline by fleet, will become Asiana's biggest shareholder with a 63.9 percent stake if the acquisition is completed.

On domestic routes, the two airlines accounted for a combined 42 percent of the market as of end-2019. The merger could raise the total share to 66 percent when combined with the market shares of their three budget carriers -- Korean Air's Jin Air Co. and Asiana's Air Busan Co. and Air Seoul Inc.

In reviewing a corporate takeover, the KFTC judges a company's acquisition of a non-viable company as an exception to application of the antitrust law.

Experts said there is a high possibility that Korean Air's deal will fit into such a case, as it is being pushed as part of efforts to reshape the airline segment hit by the new coronavirus outbreak.

Korean Air has also filed for approval with eight foreign antitrust authorities, including those from the United States, the European Union (EU), China and Japan, the KFTC said.

If any foreign regulator does not give the green light to the deal, Korean Air's acquisition could fall apart. (Yonhap)