European Union (EU) officials are reportedly preparing to block a merger valued at $2bn between South Korean shipbuilders Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries (HHI).
This is the first time since 2019 that Brussels has decided to turn down a corporate merger, reported the Financial Times (FT).
The proposed partnership between DSEM and HHI was also first announced in 2019, at which time Brussels demanded that the companies provide solutions to prevent worries about preserving competition, the report added.
According to the newspaper, the proposed merger between the South Korean companies, which are two of the world’s biggest shipbuilders, will be stopped due to being anti-competitive.
The final decision is likely to be announced this week, three people with knowledge of the matter said.
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The European Commission (EC) declined to comment.
Regulators in Singapore, China and Kazakhstan have approved the merger.
However, it needs approval from the EU, South Korea and Japan for completion.
The two South Korean shipbuilders are known in the market for manufacturing ships that carry super-chilled liquefied natural gas (LNG).
An EU official said blocking the merger is expected to help protect European consumers from paying higher prices for LNG.
The EC launched an in-depth investigation into the proposed DSME and HHI merger in December 2019 under the EU Merger Regulation.
According to the Commission, the merger is expected to reduce competition in different cargo shipbuilding markets across the globe.
In December 2020, the Chinese antitrust authority sanctioned the merger between DSME and Korea Shipbuilding and Offshore Engineering (KSOE), a shipbuilding unit of HHI.