Korea’s antitrust regulator has emerged as an unexpected obstacle to Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering (DSME), as it is still uncertain when the regulator will approve the takeover, according to industry officials, Friday.
When Hanwha signed a deal late last year to acquire DSME from the state-run Korea Development Bank (KDB), the Fair Trade Commission (FTC) was expected to approve the takeover earlier than other countries’ antitrust regulators.
“Given that Hanwha Group and DMSE have engaged in different industries, the approval procedures for their merger will be completed in the near future,” KDB said at that time.
China and Singapore gave their respective approval for the acquisition this month, following the U.K., Turkey, Japan and Vietnam.
The European Union (EU), which previously rejected HD Hyundai’s attempt to acquire DSME, is said to be announcing the result of its review by April 18. The European authorities are also expected to approve, considering the fact that Hanwha has never had a shipbuilding business.
Although the FTC initially planned to finish its review by April 18, DSME’s local rivals raised issues over the possibility of Hanwha monopolizing the nation’s defense industry after acquiring the shipbuilder, which can build submarines and warships, according to industry officials.
As a result, the FTC reportedly delayed the announcement on the result of its review indefinitely.
During a recent luncheon meeting with members of the American Chamber of Commerce in Korea, FTC Chairman Han Ki-jeong maintained a cautious stance on the issue, saying the regulator will make its decision in compliance with laws and principles.
“We are not trying to restrain the industry,” he said. “We are trying to establish a foothold for fair competition.”
Critics pointed out that the FTC’s delayed decision may weaken the competitiveness of Korea’s shipbuilding industry, saying it could raise anxiety among DSME workers.
“There is no special reason for the FTC to delay its decision,” an industry official said. “It seems that the FTC plans to wait until the European authorities announce their decision.”
As the FTC postponed its decision, Hanwha reportedly canceled its ceremony to celebrate the company’s takeover of DSME, which was supposed to take place in April on Geoje Island in South Gyeongsang Province, where the shipbuilder’s shipyard is located.
Hanwha also delayed its plan to rename DSME to Hanwha Ocean, according to industry officials.
Source: Hellenic Shipping News