Fair Trade Commission: "EU Deems It Difficult to Resolve Monopoly Issues"... 'Hyundai Heavy-Daewoo Shipbuilding' M&A Likely to Fail

EU Commission to Announce Review Results by the 20th
High Possibility of Rejection Due to LNG Ship Competition Concerns

If EU Rejects, Judgments by Korean and Japanese Competition Authorities Become Meaningless

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) is reportedly leaning towards a 'rejection' of the merger and acquisition (M&A) between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering. This follows the European Union (EU) Commission, which holds a key role in this M&A, judging that it will likely reject the deal. If the KFTC denies the merger based on the EU’s decision, the government’s restructuring plan aimed at strengthening global competitiveness through the merger will also be derailed.

A KFTC official stated on the 5th, "The EU has announced the review deadline as the 20th, and the final decision has not yet been confirmed," but added, "It is correct to view that the EU considers this merger likely to restrict competition and finds it difficult to resolve these concerns."

This statement from the KFTC differs from its previous stance of avoiding direct comments by saying, "Let's wait for the EU's decision." As the EU’s decision date approaches on the 20th, it is seen as leaning towards rejection.

Industry insiders also said, "The market widely expects the EU to reject the Hyundai Heavy Industries-Daewoo Shipbuilding M&A, and it is understood that the KFTC internally believes the EU will disapprove it."

The EU’s judgment is expected to influence the KFTC’s merger review as well. The likelihood of the KFTC also denying approval is increasing. Since the judgments by Korea and Japan would become meaningless, there are forecasts that Hyundai Heavy Industries Group might withdraw its review application.

Earlier, Hyundai Heavy Industries Group signed an acquisition agreement with KDB Industrial Bank in March 2019 to acquire Daewoo Shipbuilding & Marine Engineering and applied for M&A approval in six countries including Korea, the EU, and Japan. The EU Commission began reviewing the M&A in December of the same year. At that time, the EU expressed a negative stance, stating, "The Commission is concerned that the merger could reduce competition in various global cargo ship markets." This is because if Hyundai Heavy Industries and Daewoo Shipbuilding merge, their global liquefied natural gas (LNG) carrier market share would be around 70%, raising significant concerns that major European shipping companies such as Maersk (Denmark) and CMA CGM (France) could be adversely affected.

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