FTC likely to give conditional nod to Hanwha, Daewoo Shipbuilding merger

Fair Trade Commission [Photo by MK DB]

South Korea’s anti-trust regulator is set to deliberate over Hanwha Group’s proposed merger with Daewoo Shipbuilding & Marine Engineering Co. (DSME) on Wednesday, which could pave the way for the emergence of a comprehensive defense company that covers land, sea, and air.

According to sources, the Fair Trade Commission (FTC) is likely to grant a conditional approval to the deal, subject to a ban on discrimination in the warship market, after it holds a plenary meeting in Seoul.

The FTC will decide whether to approve the transaction and impose corrective measures based on the majority opinion of its nine members, including the chairman, vice chairman, and three standing members.

The meeting is expected to consist of FTC examiners and Hanwha Group taking turns to present their positions and answer questions from the commissioners.

The outcome of the deliberation is expected to be announced in the upcoming days.

Earlier, the FTC’s interim review report recommended that the FTC approves the merger, subject to the implementation of behavioral corrective measures. One of the key points in the report is that Hanwha must not discriminate in price or technical information when supplying warship parts to DSME’s competitors such as HD Hyundai Heavy Industries Co. and HJ Shipbuilding & Construction Co.

The report also contains conditions designed to prohibit Hanwha from unfairly using information acquired in the course of the deal, the sources said.

Hanwha is a monopoly producer of around 10 types of warship parts, including radar and navigation systems.

The FTC has been considering ways to address these concerns, as it believes that Hanwha’s acquisition of DSME and its potential vertical integration could block competition in the local warship market.