South Korea’s antitrust body, the Korea Fair Trade Commission (FTC), has conditionally approved HD Korea Shipbuilding & Offshore Engineering Co.’s acquisition of STX Heavy Industries Co. The merger is set to consolidate its position in the local ship engine market, raising concerns and necessitating regulatory conditions.
Market Dominance Concerns
HD KSOE’s acquisition will give it control over 70% of the local vessel engine market and 80% of the domestic engine component sector. The FTC has imposed conditions to prevent anti-competitive practices, including guarantees on parts supplies and pricing restrictions.
Impact on Competitors
Hanwha Engine, a key competitor procuring crankshafts from Doosan Enerbility and KM Crankshaft Co., faces potential disruptions if core parts supply is suspended. The FTC highlighted risks of fair competition and mandated safeguards against such actions by the merged entity.
Business Expansion
HD KSOE recently secured a significant contract worth $2.7 billion to build 12 container ships equipped with dual fuel engines. This deal underscores its robust business growth in the global shipping market, surpassing its annual order target and reflecting rising ship prices.
The FTC’s approval of HD KSOE’s merger with STX Heavy Industries comes amid strategic expansions in shipbuilding contracts and regulatory measures to maintain competitive fairness. The development highlights South Korea’s pivotal role in the global maritime industry and ongoing efforts to balance market consolidation with regulatory oversight.
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Source: The Korea Economic Daily
