EU watchdog halts probe into Hyundai-Daewoo combination

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The European Union’s (EU) antitrust watchdog has again suspended its probe into the proposed US$1.8 billion merger deal between two major South Korean shipbuilders, it said Tuesday (local time) on its website.

The latest probe halt was the third of its kind by the EU’s Competition Commission after the previous two suspensions caused by the coronavirus pandemic.

The Commission fell short of providing the reason for the halt in its review of the proposed combination deal.

In January and March, the Commission suspended its review of the acquisition of Daewoo Shipbuilding & Marine Engineering Co. (DSME) by Korea Shipbuilding & Offshore Engineering Co., the holding company of Hyundai Heavy Industries Co., due to the coronavirus pandemic.

The Commission resumed its investigation into the acquisition deal on June 3, aiming for its completion by early September.

Industry sources said the investigation will focus on whether the deal will hurt market competition in the shipbuilding field of liquefied natural gas (LNG) and liquefied petrochemical gas (LPG) carriers.

Last December, the Commission expressed concern that the proposed deal may push up ship prices, which will hurt the European companies’ competitiveness in the construction of cargo ships.

The deal needs regulatory approval from six countries — South Korea, China, Kazakhstan, Japan, the European Union and Singapore. Kazakhstan approved the deal in October 2019.

The acquisition has faced strong opposition from unionized workers at DSME, who have called for job security.

The Korean Metal Workers’ Union (KMWU), an umbrella labor union, said in June that the Commission allowed KMWU president Kim Ho-gyun to join in the Commission’s investigation at its request.

The Commission’s decision will enable the KMWU to look over data related to the planned acquisition and convey its opinion at hearings by the Commission, union officials said.

In March 2019, Hyundai Heavy Industries signed the deal to buy a 55.72 percent stake in Daewoo Shipbuilding in a deal that could create the world’s biggest shipbuilder with a 21 percent share of the global shipbuilding market.

In an order to acquire Daewoo Shipbuilding, Hyundai Heavy Industry Group has split Hyundai Heavy Industries into two entities — Korea Shipbuilding & Offshore Engineering (KSOE) Co., a subholding company that governs shipbuilding units under the group, and a reorganized Hyundai Heavy Industries Co.

KSOE currently manages the group’s three shipbuilding units — Hyundai Heavy Industries, Hyundai Mipo Dockyard Co. and Hyundai Samho Heavy Industries Co.

If the acquisition deal goes ahead, Hyundai Heavy Industries Group will have four shipbuilders under its wing — Hyundai Heavy, Hyundai Samho Heavy Industries, Hyundai Mipo Dockyard and Daewoo Shipbuilding.
Source: Yonhap

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