The Korea Herald


Hanwha-DSME merger still awaits Korean approval

Regulatory review delayed over antitrust concerns, watchdog says

By Kan Hyeong-woo

Published : April 3, 2023 - 17:44

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Daewoo Shipbuilding and Marine Engineering shipyard in Geoje, South Gyeongsang Province (DSME) Daewoo Shipbuilding and Marine Engineering shipyard in Geoje, South Gyeongsang Province (DSME)

South Korea’s Fair Trade Commission is closely reviewing Hanwha Group’s acquisition of Daewoo Shipbuilding and Marine Engineering as it could lead to unfair trade practices if completed, officials said Monday.

“The issue is that ships are used in battle. They are weapons. In terms of the weapons system, Hanwha has a high market share and possesses control over the market. There are other companies that make military ships other than DSME. In this case, there is a possibility that Hanwha, which is in the upper market, could give favors to DSME and put its competitors at a disadvantage that are in the lower market,” an FTC official said.

The FTC’s explanation came after earlier reports of the European Union's approval of the acquisition. With the EU’s greenlight, Hanwha has obtained approval from Britain, China, Japan, Singapore, Turkey and Vietnam since the group announced the takeover in September last year. It now has to obtain approval only from the antitrust regulator in Korea for the completion of the acquisition.

The South Korean conglomerate, which consists of Hanwha Aerospace and five other Hanwha affiliates, inked a rights offering worth 2 trillion won ($1.52 billion) to acquire a 49.3 percent stake in DSME from the state-run Korea Development Bank in December.

The FTC official added that if technical information about the ship’s components is discriminately handed out, DSME’s competitors could find themselves in a handicapped position when it comes to the Defense Acquisition Program Administration’s bid notices to build military ships.

“(If Hanwha) proposes higher prices to competitors, they could be at a disadvantage in the bidding race,” the official said. "So we are closely looking at such concerns."

Although the official refrained from giving specific names of competitors, the official said there are multiple companies in the competition. Other than DSME, South Korea’s major shipbuilders include Hyundai Heavy Industries and Samsung Heavy Industries.

The FTC has requested that Hanwha revise proposal documents for the approval of the DSME acquisition four times since December. The antitrust regulator has conducted meetings with competitors since February.

The FTC official said it is difficult to tell when the review process will end, adding that authorities are trying their best to complete the necessary steps as quickly as possible.