SEOUL, Oct. 8 (Korea Bizwire) — The proposed acquisition involving South Korea’s leading shipbuilders has been deadlocked for more than a year, as the European Union antitrust regulator shows no signs of resuming its probe into the deal.
In 2019, Hyundai Heavy Industries Holdings Co., the holding company of the global shipbuilding conglomerate Hyundai Heavy Industries Group, signed a deal with South Korea’s state-run Korea Development Bank (KDB) to buy Daewoo Shipbuilding & Marine Engineering Co., the world’s second-biggest shipbuilder by sales.
The deal is subject to approval from antitrust regulators in the European Union and five countries — South Korea, China, Singapore, Kazakhstan and Japan.
China, Kazakhstan and Singapore have given the nod to the deal that would create the world’s largest shipbuilding group with a 21 percent market share.
The European Commission started its in-depth investigation into the deal in December 2019, as it expressed concerns the transaction may significantly reduce competition in the market for cargo shipbuilding, which could lead to higher prices, less choice and reduced incentives to innovate.
Cargo shipbuilding is an important industry for the EU. Maritime transport represents about 30 percent of EU internal freight trade and 90 percent of EU external freight trade.
European shipping companies are major customers of the two South Korean shipbuilders and represent 30 percent of worldwide demand for cargo ships.
The commission stopped the antitrust investigation into the deal in July 2020, citing a lack of information from Hyundai Heavy that is needed to approve it.
“The clock (in its probe) is still stopped,” Maria Tsoni, a spokesperson at the European Commission, said in an emailed comment to Yonhap News Agency.
She said the commission has no further comment at the moment.
Hyundai Heavy has said it has been doing its best to get approval from the commission, without elaborating.
On Tuesday, South Korea’s antitrust regulator, the Fair Trade Commission, said it plans to wrap up its review over the deal by the end of the year.
The continued delay of the deal’s approval has caused unionized workers at Daewoo Shipbuilding to further protest against it.
They have been opposed to the deal, as it could cut their jobs and cause the collapse of the supply chain in the local shipping industry.
The ship parts providers of Daewoo Shipbuilding may go belly up, as Hyundai Heavy has been supplied with ship parts from its affiliates, if the deal wins all regulatory approvals, according to workers of Daewoo Shipbuilding.
Daewoo Shipbuilding has a shipyard in Geoje Island, about 400 kilometers south of Seoul.
Hyundai Heavy Industries Holdings has three shipbuilders — Hyundai Heavy Industries Co., Hyundai Samho Heavy Industries Co. and Hyundai Mipo Dockyard Co.