Hyundai Heavy Industries Holdings announced that it has filed a legal suit to the European Commission’s decision, after the latter blocked the planned merger of the South Korea’s company shipbuilding operations with Daewoo Shipbuilding & Marine Engineering Co.
According to Hyundai, the company plans to move forward with a new business plan and does not intend to re-bid on Daewoo Shipbuilding & Marine Engineering Co. (DSME).
It is important to recall that the EC opposed to the proposed acquisition of DSME by Hyundai Heavy Industries under the EU Merger Regulation.
The decision was based on the merger’s creation of a dominant position and reduced competition in the worldwide market for the construction of large liquified gas carriers.
As described, the EU had based its opposition on concerns over a monopoly that would be created in the European industry. In addition to that, the companies did not offer a solution to addressing the potential for reduced competition in critical markets.
Noting that the EU could not officially stop the merger, the EU regulators could impose tariffs against the company in order to stop them from doing business with the companies in the European Union.
The legal filing took place on March 23 at the European Union’s General Court.
We believe it was not reasonable for the EU to judge the merged entity’s expected market dominance based solely on the two companies’ market shares. So, we’re seeking the court’s judgment on this matter
…said an official at the shipbuilder’s holding company.
According to Korea’s state-run Korea Development Bank, which is the main creditor of DSME, new alternatives are explored in order to pursue the strategy to divest its holdings in the shipbuilder.
As mentioned, Hyundai had said it would buy the bank’s 55.7% stake in DSME in a transaction valued at $1.6 billion and run the shipyard as an independent business alongside Hyundai’s yards and managed by Korea Shipbuilding & Offshore Engineering.
