On 13 January 2022, the European Commission prohibited the acquisition of Daewoo Shipbuilding & Marine Engineering CO., Ltd (“DSME”) by Hyundai Heavy Industries Holdings (“HHIH”), two worldwide leading shipbuilders, inasmuch as it would have granted the new merged company a dominant position thereby reducing competition in the worldwide market for the construction of large liquefied gas carriers (“LLNGCs”).

Notified in November 2019, on 17 December 2019 the proposed acquisition was subjected to an in-depth by the Commission, which feared that the transaction might have removed DSME as relevant competitor in markets relating to large containerships, oil tankers, liquefied natural gas and liquefied petroleum gas carriers, preventing the remaining shipbuilders from exerting sufficient competitive pressure on the merged entity.

Specifically focusing on the market for LLNGCs, the Commission concluded that the transaction would have resulted in a reduced choice in suppliers and higher prices for European customers. More particularly, the Commission considered, amongst other things, that i) the combined entity would have been by far the largest player in the world in an already concentrated market, ii) the remaining competitors’ capacities would not have been enough to constraint the new company, and iii) LLNGCs are highly sophisticated vessels that are extremely complex to build, making it extremely difficult for external players to successfully entering and operating in the market.

Therefore, since the parties did not formally offer remedies to meet the Commission concerns, the latter prohibited the acquisition as originally notified.

Marco Stillo