Singapore Raises Concern over HHI-DSME Deal

The Competition and Consumer Commission of Singapore (CCCS) has expressed concern about the agreement of fusion notified from the South Korean shipbuilding groups Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering Co. (DSME).

The authority antitrust of Singapore has raised competition concerns with the proposed acquisition by Korea Shipbuilding & Offshore Engineering Co., Ltd. (KSOE) of a majority interest in DSME and the intended integration of the businesses of KSOE and DSME.

Earlier, on 12 September 2019, CCCS accepted an application from KSOE for a decision on whether the Proposed Transaction infringes section 54 of the Competition Act (Cap. 50B), which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.

KSOE and DSME overlap in the supply of commercial vessels, including oil tankers, containerships, liquefied natural gas (LNG) carriers and liquefied petroleum gas (LPG) carriers. Both companies operate in Singapore as foreign companies registered in Singapore.

Third party feedback suggests that the parties are currently two of the largest suppliers for the global supply of LNG carriers, and possibly large containerships and large oil tankers.

There are concerns that the proposed transaction will remove competition between two main suppliers of these commercial vessels, to the detriment of customers in Singapore.

Feedback also revealed concerns on whether alternative suppliers will be sufficiently strong competitors to the merged entity. There are also concerns that the barriers to entry and expansion, particularly in relation to more sophisticated vessels such as LNG carriers, may be high.

"At this stage, the parties may offer commitments to address the potential competition concerns that may arise as a result of the transaction, or the merger will proceed to a detailed Phase 2 review upon CCCS’s receipt of the relevant documents from KSOE. Commitments may also be offered at any time during a Phase 2 review," it said.