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| A liquefied natural gas carrier vessel built by Hyundai Heavy Industries Korea Times file |
By Lee Kyung-min
Korea Shipbuilding & Offshore Engineering (KSOE), the holding company of Hyundai Heavy Industries (HHI), said Friday that it has not ruled out legal measures to protest the veto of the European Union antitrust regulator a day earlier against its acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).
"We are having internal discussions on whether we should seek legal remedies to challenge the veto," an official from the holding firm said.
"We cannot say at this point that we have firmly decided on the next course of action, but what we can say for sure is that we have not ruled anything out. Specifics will be outlined immediately after we receive the EU regulator's ruling which we consider unreasonable and regretful."
The comment came hours after the European Commission blocked the holding firm's proposed acquisition of the Daewoo subsidiary, claiming the deal could lead to a monopoly in the liquefied natural gas (LNG) carrier market.
"The merger would have created a dominant position by the newly merged company and reduced competition in the worldwide market for the construction of large LNG carriers," the commission said in a statement.
"Given that no remedies were submitted, the merger would have led to fewer suppliers and higher prices for large vessels transporting LNG. This is why we prohibited the merger," European Commissioner for Competition Margrethe Vestager said in the statement.
The EU regulator said the deal would have led to up to a combined 60 percent market share by the two shipbuilders in the LNG ship market.
Korea's big three shipbuilders ― subsidiaries belonging to Samsung, Hyundai and Daewoo ― won 68 of 78 LNG carrier orders in the global market last year. Excluding Samsung, 70 percent of the global total was manufactured by the Hyundai and Daewoo units.
Despite the holding firm's efforts, the deal is almost certain to fall through, as indicated by the announcement of the Fair Trade Commission (FTC) on the closure of its review of the deal between Hyundai Heavy and DSME.
The FTC was scheduled to deliberate on the review at a full-panel meeting, but the EU regulator's veto rendered the FTC's judgment moot.
"The two firms are unable to continue with the deal, due to the EU's veto the previous day," Korea's antitrust regulator said. "Since KSOE submitted a withdrawal request, the screening process will be terminated immediately in accordance with procedural rules."
The EU's decision has drawn special attention as it came after the deal was approved earlier by authorities in other countries including China, Singapore and Kazakhstan.
Meanwhile, the failed acquisition poses a major headache to Korea Development Bank, the latest shareholder with a 55.7 percent stake in DSME, since the three-year efforts to sell off the shipbuilder are ending up in failure.
Some market watchers say DSME could face a liquidity crisis, despite its advance orders in the amount of $10.8 billion (12.8 trillion won) won last year, exceeding its previous target of $7.7 billion by 40 percent.
They say Daewoo's creditors led by the state lender may have to spend taxpayers' money, in addition to 13 trillion won pumped in over the past 20 years, up to three years before the orders fully translate into annual sales of the firm.
