Hyundai Heavy Industries Holdings Co Ltd’s $1.8 billion merger with rival shipbuilder Daewoo is expected to face a full-scale investigation in Europe due to serious EU antitrust concerns, Reuters reports.
In January and with the aim to address the over-capacity in the industry, Hyundai announced the deal to create the world’s biggest shipbuilder with a 21% market share, making headlines in 2019.
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These developments were expected to create two behemoths that will control around 46% of the global market among the world’s top 10 yards, according data provided by VesselsValue Ltd.
Reuters now reports that the European Commission will launch an investigation into the deal in the following days, after a preliminary review ends on Tuesday, December 17.
It is said that a full-scale investigation can take up to five months and can end up with companies forced to sell off assets or transfer technology or contracts to rivals to address competition concerns.
The deal requires regulatory clearance in South Korea, Singapore, China and Japan- with Kazakhstan to have already given the green light. Hyundai said that it was working with Singapore’s regulators to address their concerns.
Hyundai is now aiming to convince EU regulators to take into account the competitive threat from the merged China Shipbuilding Industry Corp (CSIC) and China State Shipbuilding Corp Ltd.
The two Korean shipyards have stated they will compete independently after merging, with each company to negotiate their own contracts with customers and suppliers.
