Several days ago, the European Commission has started a full-scale investigation to assess the proposed takeover of Daewoo Shipbuilding and Marine Engineering (DSME) by the Hyundai Heavy Industries Group (HHI). The investigation completed on 17 December while was carried out under the EU Merger Regulation.
EU expressed its concerns for the above mentioned merger, as it may bring negative impacts in the cargo shipbuilding industry and reduce its global competition.
However, if the $1.8 billion deal run smoothly, the merged company would have a 21% market share, expecting to control nearly half of the global shipbuilding market.
Cargo shipbuilding is an important industry for the European Union. Maritime transport represents a substantial portion of the EU’s internal and external freight trade, with European shipping companies regularly purchasing vessels from DSME and HHIH, two of the leading cargo shipbuilders in the world. This is why we will carefully assess whether the proposed transaction would negatively affect competition in the construction of cargo ships, to the detriment of European consumers.
…said the Executive Vice-President Margrethe Vestager, responsible for competition policy.
Moreover, the EU highlighted that the maritime transport introduces about 30% of E.U. internal freight trade and a 90% of E.U. external freight trade.
At the same time marked that EU shipping companies are major customers of DSME and HHI as they represent 30% of the global cargo ships need.
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Overall, the Commission is worried about the market of larger container ships, oil tankers, LNG vessels and LPG carriers, since the merger might lead to higher prices, less choices and lower motives for innovation.
Concluding, EU has 90 working days until 7 May, 2020 in order to take its final decision, while the takeover is also under review from competition regulators in South Korea, China and Japan.
