Photo: A9999 E.on-Ruhrgas/ dpa
The EU Commission has vetoed the planned merger of two shipbuilding heavyweights in South Korea.
The Brussels authority said it is prohibiting the takeover of Daewoo Shipbuilding & Marine Engineering by rival Hyundai Heavy Industries Holdings.
A merger would therefore mean that the merged company controls almost two thirds of the global market for tankers for liquefied natural gas (LNG).
"Large liquefied natural gas tankers are an essential part of the supply chain for liquefied natural gas," said EU Commission Vice President Margrethe Vestager, who is responsible for competition.
At the same time, liquefied natural gas "contributes to the diversification of the European energy supply and thus increases the security of supply".
The merger of the two South Korean shipbuilders would have "led to a dominant position on the world market for the construction of large liquefied natural gas tankers on which European transport companies are dependent".
In the absence of any remedial action taken by the companies, "the merger would have led to a reduction in the number of suppliers and higher prices for large liquefied natural gas tankers," said Vestager.
"That's why we prohibited the merger."
Under the Merger Regulation, the EU can also veto the merger of non-European companies if they have a decisive influence on the common EU market of around 450 million people.
In the past, for example, the Brussels authorities had prohibited the merger of the Indian group Tata Steel with Thyssenkrupp in 2019.
Hyundai calls decision "unreasonable"
According to the South Korean news agency Yonhap, Hyundai reacted disappointed to the decision and described it as unreasonable.
The Commission has only limited itself to considering the market share for LNG ships, argued the company and reserved the right to challenge the EU veto before the European judiciary.
According to the EU Commission, Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries Holdings (HHIH) are "two of the three largest players in the very concentrated global market for the construction of large liquefied natural gas tankers."
With these highly developed ships, which can carry large quantities of liquefied natural gas at a temperature of minus 162 degrees Celsius, the global market has reached a volume of up to 40 billion euros in the past five years - with "almost 50 percent of orders" from European companies had been abandoned.
The plans for the merger of DSME and HHIH, which became known in 2019, have already been approved by the competition authorities in China and Singapore;
in Japan and also in South Korea itself, a decision is still pending.