The European competition authority is about to block the proposed merger between the two largest shipbuilders in the world in South Korea. According to the EU, the merger between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries distorts competition and should be stopped.
The European veto will be the first since Brussels prevented a merger between the Indian Tata Steel (including Hoogovens) and the German Thyssenkrupp more than two years ago. The EU opposes mergers that create economic powers dominating the market, which can lead to higher prices for consumers.
Brussels is reportedly particularly concerned about the dominant position of the two South Korean shipbuilders in the market for transporting liquefied natural gas, especially now that European energy prices are rising sharply. The two companies dominate the market for building ships that transport supercooled liquefied natural gas.
The proposed merger was first announced in 2019. Brussels had demanded that the companies come up with solutions to address competition concerns. Hyundai had proposed not raising prices for tank ships temporarily, but that offer was insufficient.
The merger has already been approved by regulators in Singapore, China, and Kazakhstan but still requires approval from authorities in the United States and Europe. An EU official said that blocking the merger would help protect European consumers from paying higher gas prices. The EU is the third largest importer of liquefied gas in the world.