Hyundai, Daewoo tie-up faces EU antitrust veto, sources say (updated)

HD Hyundai

10/12/2021 17:46

(Adds European Commission declines comment, adds Hyundai
comment, Daewoo not immediately available, details)
    By Foo Yun Chee
    BRUSSELS, Dec 10 (Reuters) - South Korean shipbuilder
Hyundai Heavy Industries'  267250.KS  proposed acquisition of
rival Daewoo Shipbuilding & Marine Engineering Co Ltd
 042660.KS  is set for an EU antitrust veto after the companies
declined to offer remedies to allay competition concerns, people
familiar with the matter said.
    Hyundai, one of the largest shipbuilders in the world and
which had announced the deal in 2019 in part due to overcapacity
in the sector, said on Friday it expected unconditional European
Commission clearance for the deal.
    That is unlikely after an informal offer of remedies, which
included the sale of part of a shipyard, fell short while a
formal proposal was never put on the table, the people said. 
    The Commission is concerned that the deal would create two
large players from the current three.
    Hyundai said it expected the EU competition watchdog to
reach the same conclusions as regulators in Singapore, China and
Kazakhstan which have already given the green light.
    "Market dominance cannot be evaluated by market share alone
in the shipbuilding industry," Hyundai said in a statement. 
    "It is important to also assess the market based on overall
market conditions and dynamics. The shipbuilding market is
unable to be structurally dominated by one individual company." 
    The Commission, which has set a Jan. 20 deadline for its
decision, declined to comment. Daewoo did not respond to a
request for comment sent outside of office hours.
    EU concerns centered on liquefied natural gas (LNG) carriers
which are used to transport LNG between Europe and the Middle
East and North Africa, other people familiar with the matter
told Reuters last year.  urn:newsml:reuters.com:*:nL5N2GK3H1
    European shipping companies are major customers of Hyundai
and Daewoo. 
    An EU veto would be the first since the Commission in 2019
blocked Thyssenkrupp and Tata Steel's plan to form a landmark
joint venture, on worries that the deal would have pushed up
prices and reduced competition.

 (Reporting by Foo Yun Chee in Brussels
Editing by Louise Heavens and Matthew Lewis)
 ((foo.yunchee@thomsonreuters.com; +32 2 287 6844; Reuters
Messaging: foo.yunchee.thomsonreuters.com@reuters.net))