KFTC Extends Corrective Measures on Hanwha-Daewoo Shipbuilding Merger by 3 Years... "Monopoly Power Remains"

Hanwha Aerospace, Hanwha Systems, and Hanwha Ocean Required to Comply with Corrective Measures Until 2029

Possible Additional Two-Year Extension Depending on Market Conditions

The Korea Fair Trade Commission (KFTC) has decided to extend the implementation period of the corrective measures imposed at the time of the merger between Hanwha Group and the former Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) by three years. This decision was made based on the judgment that concerns over restricted competition in the market have not yet been resolved, marking the first case in which the behavioral corrective measure period has been extended as part of a merger review.

Environmentally friendly LNG carrier built by Hanwha Ocean. Photo by The Asia Business Daily DB.

On April 28, the KFTC announced that it would extend by three years the implementation period for the corrective measures imposed on Hanwha Aerospace, Hanwha Systems, and Hanwha Ocean. As a result, the parties subject to the measures will be required to comply with the corrective actions until May 2, 2029. The KFTC may review market conditions again in three years and decide whether to extend the period for up to an additional two years.

The KFTC's decision to extend the implementation period is due to the continued high concentration in the relevant market. An analysis of market competition over the past three years (2023–2025) showed that Hanwha Ocean has maintained its dominant position as the leading operator in both the surface ship market (67.3%) and the submarine market (64.8%).

Hanwha Group affiliates also continue to wield significant control in the naval vessel parts market. In eight component markets—including electro-optical equipment, naval fire control equipment, and engines for naval vessels—Hanwha companies remain either monopolists or maintain a substantial lead over the second-largest operator. The KFTC determined that, as it remains difficult for competing shipbuilders to find alternative suppliers for these parts other than Hanwha, concerns about restricted competition—such as through discriminatory price quotations or selective provision of information—have not been alleviated.

Conversely, some markets where a competitive structure has emerged due to the entry of new operators were excluded from the scope of corrective measures. In the naval Identification Friend or Foe (IFF) equipment market, Hanwha Systems' market share has dropped significantly, relegating the company to the second position. In the integrated ship control systems market, competitive pressure has also increased due to a rise in orders for rival companies.

The KFTC also cited as reasons for the extension that the bid evaluation criteria from the original decision remain in place, and that no clear preemptive monitoring system has been established to replace the corrective measures. However, the commission added that this decision is simply an extension as part of the review process, and that there has been no evidence of non-compliance or legal violations by Hanwha over the past three years.

The KFTC stated, "We will continue to monitor whether competition-restricting concerns arising from corporate mergers are being addressed, and will closely track changes in market conditions and the regulatory environment going forward."

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