Singapore’s competition authorities will run the rule over Hanwha Group’s proposed deal to acquire shipbuilder Daewoo Shipbuilding & Marine Engineering.
Hanwha applied to the Competition & Consumer Commission of Singapore (CCCS) for a decision on whether the deal would infringe competition rules.
Section 54 of Singapore’s Competition Act 2004 prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.
Under the deal, South Korea’s Hanwha would become the largest shareholder of compatriot shipbuilder DSME with 49.33% of the outstanding shares, with the power to appoint 50% or more of its board.
In its application, Hanwha claimed that it and DSME “do not overlap in the supply of any goods or services in any market in Singapore”.
However, the CCCS said the deal is likely to result in “vertical integration” in the global market for the supply of LNG carrier production and storage facilities for offshore plants.
The Hanwha Group is engaged in manufacturing and supplying compressors typically used as components in LNG carriers, while DMSE builds LNG carriers, among other types of vessels, the CCCS said.
Similarly, it said Hanwha makes and supplies compressors required for production and storage facilities to manufacturers that build offshore plant facilities, while DSME makes and sells production and storage facilities for offshore plants.
The commission is inviting public feedback on the proposed transaction, with a submission deadline of 3 February.
The competition authorities have not shied away from investigating merger and acquisition deals that they feel are detrimental to Singapore.
Two years ago, the CCCS expressed concerns over Aon’s proposed acquisition of insurance broking rival Willis Towers Watson. The deal eventually collapsed.
In 2018, it blocked Wilhelmsen’s $400m takeover of Drew Marine Technical Solutions over fears that it would “substantially lessen competition”, particularly in the local market for the supply of water treatment chemicals.
A year later, it raised concerns about the impact on the LNG carrier newbuilding market of a planned merger of Hyundai Heavy Industries and DSME.
The CCCS later approved the deal, but it eventually fell through after being blocked by competition authorities in the European Union.
