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EU to restart probe into Hyundai-Daewoo deal once data provided

All News 07:28 July 19, 2020

By Nam Kwang-sik

SEOUL, July 19 (Yonhap) -- The European Union's (EU) antitrust regulator said Sunday it will resume its investigation into the merger of two South Korean shipbuilders if information requested is provided in a timely manner.

Last Monday, the EU's Competition Commission stopped the clock in its in-depth investigation into a proposed US$1.8 billion acquisition of Daewoo Shipbuilding & Marine Engineering Co. (DSME) by Hyundai Heavy Industries Holdings Co. (HHIH), without providing the reason for the halt.

"This procedure in merger investigations is activated if the parties fail to provide, in a timely fashion, an important piece of information that the Commission has requested from them," Maria Tsoni, a spokesperson at the Commission, said in an email to Yonhap News Agency.

To comply with merger deadlines, parties must supply the necessary information for the investigation in a timely fashion, the spokesperson said, adding that "failure to do so will lead the Commission to stop the clock."

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

In January and March, the Commission suspended its review of the acquisition due to the coronavirus pandemic.

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

"The step by the EU antitrust watchdog is one of the normal procedures of the business combination review. We will sincerely cooperate with the Commission as requested," said Park Joon-su, a spokesman at Korea Shipbuilding & Offshore Engineering Co., the subholding company of Hyundai Heavy Industries Holdings Co.

This photo provided by Hyundai Heavy Industry Co. shows a liquefied natural gas (LNG) carrier built by the shipbuilder. (PHOTO NOT FOR SALE) (Yonhap)

However, 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.

On July 9, the KMWU submitted its opinion to the Commission that the acquisition may beef up the monopoly status of Hyundai Heavy Industries Holdings in the local shipbuilding market.

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 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.

This photo provided by Daewoo Shipbuilding & Marine Engineering Co. shows a container carrier being built by the shipbuilder at its shipyard on Geoje Island. (PHOTO NOT FOR SALE) (Yonhap)

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 a bid to acquire Daewoo Shipbuilding, Hyundai Heavy Industry Group has split Hyundai Heavy Industries into two entities -- Korea Shipbuilding & Offshore Engineering Co. (KSOE), 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.

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