[2021 National Audit] Lee Yong-woo "Full Review Needed Before Hyundai Heavy-Daewoo Shipbuilding Sale"

"Concerns Over Monopoly Cause Delays in EU Merger Reviews, Impacting Businesses"

[Asia Economy Reporter Jin-ho Kim] Due to practical reasons such as resolving the monopoly in the LNG ship market, there are calls from the political sphere to fully reconsider the sale of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

According to the National Assembly and financial circles on the 17th, Lee Yong-woo, a member of the Democratic Party of Korea, emphasized the need to fully reconsider the sale of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering at the Industrial Bank of Korea’s audit held on the 15th.

Lee stated, "In the situation where the acquisition process is continuously delayed, if approval is not obtained from the European Union (EU) by the end of the year, the risks such as national treasury losses will increase," adding, "Since policy funds are being invested, it is necessary to reduce the national treasury burden and minimize the damage to Daewoo Shipbuilding & Marine Engineering’s corporate value."

Earlier, the Industrial Bank of Korea announced the acquisition of Daewoo Shipbuilding & Marine Engineering by Hyundai Heavy Industries in January 2019.

In July of the same year, a corporate merger notification was initiated with the Fair Trade Commission, and since then, the approval process for the corporate merger review by overseas competition authorities has been ongoing. After more than two years, Kazakhstan, Singapore, and China have approved it, but the review is somewhat delayed in South Korea, Japan, and the EU.

In particular, the delay in the EU’s review is becoming an issue. It is known that the main cause is the EU’s request for Hyundai Heavy Industries to respond regarding measures to resolve the LNG ship monopoly. The EU is carefully examining the possibility of monopoly in the shipbuilding market, and as of the first half of this year, Korean companies account for 94% of global LNG ship orders. After the merger of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, the combined LNG ship market share of the two companies is estimated to be about 60%.

It is also reported that the Fair Trade Commission of Korea is passive in reviewing the corporate merger of the two companies. According to materials submitted by Seo Il-jun, a member of the People Power Party, the Fair Trade Commission has not even submitted the matter to subcommittees over the past two years. In this regard, Lee Dong-gul, chairman of the Industrial Bank of Korea, expressed at a press conference last month that the Fair Trade Commission should actively assist in approving this corporate merger for the restructuring of the shipbuilding industry.

Lee said, "As the LNG ship market is expanding, resolving the monopoly is a difficult reality unless the companies are separated and sold separately," adding, "With European shipping companies accounting for about 30%, it is difficult to proceed with the sale without approval of the EU merger review."

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