South Korea’s leading defense maker Hanwha Group has obtained approval for its acquisition of Daewoo Shipbuilding & Marine Engineering Co. (DSME) from the anti-trust authorities of most countries, but Seoul has yet to approve the deal over concerns about its impact on the weapons industry.
China and Singapore gave the nod earlier this week to
Hanwha’s deal to buy the world’s No. 2 shipbuilder for 2 trillion won ($1.6 billion), industry sources in Seoul said on Thursday.
Turkey, Japan, Britain and Vietnam — among eight nations to which Hanwha has applied for merger reviews — have already approved the takeover, while the European Union plans to announce a preliminary decision by April 18.
The Korea Fair Trade Commission had initially planned to complete its reviews, which were started on Dec. 19, 2022, before April 18.
CONCERNS OVER MARKET DOMINANCEBut the fair-competition watchdog was known to extend its review period for up to 60 days as domestic defense makers such as Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., as well as the Defense Acquisition Program Administration (DAPA), raised concerns over the combination. They worried about a possible increase in market dominance through the vertical integration of Hanwha’s defense sectors with DSME’s battleship business.
Vertical consolidation is sometimes viewed as anticompetitive as it can prevent rivals from access to needed inputs or raise their cost of obtaining them in certain cases.
Hanwha has decided to indefinitely postpone the launch ceremony for the combined entity, which had been scheduled for early April.
“As the FTC’s review has been prolonged, we have decided to delay the ceremony to celebrate the new start under the name of Hanwha Ocean,” said a group official.
Write to Jae-Fu Kim at
hu@hankyung.com Jongwoo Cheon edited this article.
