EU Fights Against Monopoly, Blocks HHI-DSME Merger in Long-awaited Decision

Spread the love

(WMN) The European Commission has adopted a decision to prohibit a mega-merger that would combine two South Korean shipbuilding companies, Hyundai Heavy Industries Holdings (HHIH) and Daewoo Shipbuilding & Marine Engineering (DSME).
The merger between the two South Korean shipbuilders would have created a dominant position by the new merged company and reduced competition in the worldwide market for the construction of large liquefied natural gas (LNG) carriers, the commission has concluded.
“Large LNG vessels are an essential element in the supply chain of liquefied natural gas (LNG) and enable the transport of this source of energy around the globe. LNG contributes to the diversification of Europe’s source of energy and therefore improves energy security,” Executive Vice-President Margrethe Vestager, in charge of competition policy, said.
“The merger between HHIH and DSME would have led to a dominant position in the global market for the construction of large LNG vessels, for which there is significant demand from European carriers. Given that no remedies were submitted, the merger would have led to fewer suppliers and higher prices for large vessels transporting LNG. This is why we prohibited the merger.”
Specifically, the EC’s decision is based on the following considerations:
• The parties enjoy very large and increasing market shares.
• Very few alternatives for customers.
• Limited capacity in the market.
• Very high barriers to entry and no buyer power.
• No impact of the coronavirus pandemic on the LNG market.
Today’s decision follows an in-depth probe by the commission of the proposed transaction.
The investigation started in November 2019 and was suspended several times as the parties did not provide the information requested by the EC in a timely manner, the commission said.
*Culled from World Maritime News.