Brussels wants to plan a monster alliance between two shipbuilders’ prices and that has everything to do with energy
The EU is concerned about Korean dominance in liquefied natural gas transportation amid skyrocketing energy prices.
Brussels is preparing to invest in a USD 2 merger between two of the largest shipbuilders in South Korea. It is the first time since 2019 that the EU wants to put a stop to an international company merger. That reports The Financial Times Tuesday.
It is about a merger between Daewoo and Hyundai, two heavyweights in the maritime sector. The EU sees this monster alliance as disruptive to its own shipbuilders. This week, Brussels’ position will be made public, three insiders told the business newspaper.
In 2019, Brussels vetoed a merger between the Indian Tata Steel and the German ThyssenKrupp, a steel trader and tech company. At the time, it was feared that prices for consumers would increase too much as a result of the collaboration. ThyssenKrupp contested the decision before a European court.
Market dominance for shipping supercooled liquefied natural gas
The decision to target the merger in South Korea is all about energy during the winter. South Korean shipbuilders are liquefied natural gas (LNG) derivatives for the EU and account for about 30 percent of the base demand for cargo ships. Deliveries of LNG to support the energy crisis at the end of last year to reduce high gas prices.
Liquefied natural gas freight costs are over $300,000 per day due to global demand for this commodity The Financial Times. The two South Korean players, now planning a merger, also dominate the market for producing ships that transport super-cooled LNG. Last year, the two companies jointly produced 45 of the 75 LNG ships that came onto the market in total.
So the EU fears that it will become even more expensive to ship LNG to our region if the merger goes through. Our region has therefore become the third largest importer of LNG in the world.
“EU must unconditionally merge”
The merger was well approved by regulators in China, Kazakhstan and maritime artery Singapore. But before the deal can go through, a green light from the EU, Japan and South Korea itself is still needed.
Hyundai covers the EU the merger should be conditional. “It is one possibility to judge the dominant position in the shipbuilding market on the company alone, and the market structure makes it possible to monopolize the market,” the company told the business newspaper.
(mah)