S. Korea ship-making giants Daewoo-Hyundai merger faces EU veto

The EU antitrust authority will block the merger of South Korean ship-making giants Daewoo and Hyundai over concerns that the deal may restrict the supply of cargo vessels, sources said in an AFP report.

The veto of the tie up comes two years after Brussels stopped India’s Tata Steel and Germany’s Thyssenkrupp from merging, and three years after it blocked the merger of the train businesses of Siemens and Alstom, angering France and Germany.

After more than two years of procedure, an unusually long time for this kind of case, the EU commission will announce “in the next few days” its veto to the operation, said a source, confirming a report in the Financial Times.

Of particular concern is the deal’s fallout on the construction of ships transporting liquefied natural gas, especially at a time when high energy prices are an acute concern in Europe.

The takeover of Daewoo Shipbuilding & Marine Engineering by rival Hyundai Heavy Industries Holdings would create a group controlling nearly two-thirds of the global LNG cargo ship market, the source said.

But the price of cargo shipping more generally has exploded in recent months due to the shock to the global chain caused by the coronavirus pandemic.

The commission and the two companies “have explored all possible remedies to the competition concerns raised in considerable detail”, without success, said a second source for whom the rejection of the operation is “beyond doubt.”

The deadline for the decision was set for January 20, after several extensions.