Media reports claim that the European Union will object to the proposed merger of South Korea’s Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering (DSME).
Namely, Korea Shipbuilding & Offshore Engineering (KSOE) filed for the review of the proposed merger in November 2019, asking for approvalfrom the EU, China, Singapore, Japan, and Kazakhstan.
So far, only China, Singapore, and Kazakhstan approved the combination with the South Korean authorities reportedly waiting for the EU. Japan’s intentions also remain unknown.
Now, the Europeans launched an in-depth review after raising concerns about the anti-competitive implications for European shipowners. In fact, it was highlighted that the combined companies would have a quarter of the world’s shipbuilding business and dominate the South Korean shipbuilding industry.
More specifically, the EU is focusing on the lack of competition mainly for LNG carriers, with South Korean media reporting that the EU “has reached a consensus to block,” the proposed acquisition.
However, EU’s oppositing cannot officially prevent the merger, but it will make it difficult for the shipyards to win contracts from European companies.
The same media also claim that the EU is citing the fact that the two shipyards currently build as much as two-thirds of the LNG ships, as well as the potential for the Koreans to raise prices in this segment.
