Hyundai Heavy Industries’ (HHI) planned takeover of compatriot Daewoo Shipbuilding & Marine Engineering (DSME) in South Korea is now in jeopardy with the European Commission set to start a full investigation into the merger with anti-monopoly concerns growing.
Reuters is reporting that Europe is following Singapore in raising antitrust concerns over the merger, which would create a shipbuilder commanding more than one fifth of the global orderbook.
The European Commission will launch an investigation into the deal next week, Reuters reports, following a preliminary review which ends next Tuesday.
European yards have a long history of fighting what they claim is state aid that has backed up Korean yards over the years.
“A full-scale investigation can take up to five months and in most cases ends with companies forced to sell off assets or transfer technology or contracts to rivals to address competition concerns,” Reuters reported.
DSME and HHI merging comes at a time where China’s top two shipbuilding groups – CSIC and CSSC – have merged. These two giant mergers could create far more “belligerent pricing” for newbuilds in the future, William Fairclough, the managing director of Wah Kwong Maritime Transport Holdings, told delegates attending the Maritime CEO Forum in Hong Kong last month.