Fair Trade Commission Conducts First Review of Daewoo Shipbuilding and Hyundai Heavy Merger for Over 2 Years... Only One Among 6 Countries

[Sejong=Asia Economy Reporter Kwon Haeyoung] Regarding the merger review between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries, the Korea Fair Trade Commission (KFTC) has been criticized for "delayed review" as it is the only one among the six global competition authorities required to be notified that has not even completed the first phase of the review. However, since the merger of the two companies can only proceed after obtaining approval from all reviewing countries, it is expected that the KFTC will quickly complete its review once the biggest hurdle, the European Union (EU), grants approval.

The office of Kang Min-guk, a member of the People Power Party (Jinju-eul, Gyeongnam), announced on the 4th that after examining the "Progress of Merger Review between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries" data submitted by the Korea Development Bank, it was found that among the six countries subject to merger notification, three countries (China, Kazakhstan, Singapore) have completed their reviews with "unconditional approval," but the remaining three countries (South Korea, Japan, European Union) are still under review.

Hyundai Heavy Industries applied for the merger review to the KFTC on July 1, 2019, but the KFTC has been reviewing for two years and three months and is currently still at the first phase of the review. Japan, which is still conducting its review, completed the first phase of its review in March 2020, and the European Union (EU) began the second phase of its review in December 2019.

The office pointed out that it is a serious problem that only the KFTC has not even completed the first phase of the review despite it being a merger review for national interests. Therefore, they urged the KFTC to disclose a detailed merger review plan.

Assemblyman Kang Min-guk stated, "Considering that Daewoo Shipbuilding & Marine Engineering posted an operating loss of 1.2 trillion won in the first half of this year, the necessity of the strategic investment deal including Hyundai Heavy Industries' financial support of 2.5 trillion won has increased even more." He added, "With the slow recovery of ship prices compared to rising raw material costs such as steel prices, there is a concern that the crisis may recur in an emergency." He also said, "The prolonged merger review by the KFTC causes management uncertainty, which negatively affects the morale of Daewoo Shipbuilding & Marine Engineering employees and sales activities targeting clients, raising concerns that the timing of the merger might be missed, resulting in damage to national interests."

However, if the merger between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries passes the EU competition authority's threshold, the KFTC is expected to approve it quickly. The merger requires approval from all reviewing countries, but the EU, where European shipowners are concentrated, is delaying approval due to concerns over the monopoly of liquefied natural gas (LNG) carrier orders resulting from the merger. It is reported that the KFTC feels burdened by the fact that if it approves the merger first, it may be seen as favoring domestic companies, and more importantly, if the EU disapproves, the merger could be canceled.

This content was produced with the assistance of AI translation services.