Commission blocks merger of South Korean LNG shipping giants

The European Commission announced on 13 January that it has blocked a merger between two large South Korean shipbuilders who make liquid natural gas carriers. The proposed merger is one of only ten which the Commission has blocked in the last ten years. 

The acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) by Hyundai Heavy Industries Holdings (HHIH) would have given the new company a combined market share of at least 60%, meaning there would be very few alternatives for customers. Companies usually offer remedies to reassure competition authorities when confronted with concerns HHH and DSME did not meet the final Commission deadline to do so. 

Executive Vice President Margrethe Vestager (pictured), in charge of competition policy, said: “Large LNG vessels are an essential element in the supply chain of liquefied natural gas (LNG) and enable the transport of this source of energy around the globe. LNG contributes to the diversification of Europe's source of energy and therefore improves energy security. The merger between HHIH and DSME would have led to a dominant position in the global market for the construction of large LNG vessels, for which there is significant demand from European carriers. Given that no remedies were submitted, the merger would have led to fewer suppliers and higher prices for large vessels transporting LNG. This is why we prohibited the merger.”

In the past ten years, the Commission has approved over 3,000 mergers. The prohibition is only the tenth merger that the Commission has blocked over the same period.

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