Korea’s Fair Trade Commission (FTC) has unexpectedly delayed its decision on Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering (DSME), causing growing uncertainty about the timeline for the takeover’s approval, say industry insiders on Friday.
Hanwha Group inked a deal in late 2021 to acquire DSME from the state-run Korea Development Bank (KDB). It was initially expected that the FTC would greenlight the takeover before other countries’ antitrust regulators, given that Hanwha Group and DSME operate in separate industries, and the KDB believed the merger would be swiftly completed.
Numerous countries, such as China, Singapore, the U.K., Turkey, Japan, and Vietnam, have already granted their approval for the acquisition. The European Union (EU), which had previously rejected HD Hyundai’s bid to acquire DSME, is slated to announce its review results by April 18, with approval likely due to Hanwha’s lack of a shipbuilding business background.
Despite the initial plan to conclude its review by April 18, the FTC has reportedly pushed back its decision indefinitely due to concerns voiced by DSME’s domestic competitors. They worry that Hanwha might monopolize South Korea’s defense industry after acquiring the shipbuilder, which is capable of constructing submarines and warships.
FTC Chairman Han Ki-jeong, while addressing a recent luncheon gathering with the American Chamber of Commerce in Korea, maintained a cautious stance on the matter. He stated that the regulator’s decision would adhere to laws and principles, focusing on fostering a foundation for fair competition.
Critics argue that the FTC’s delayed decision could undermine the competitiveness of Korea’s shipbuilding industry and heighten anxiety among DSME employees. An industry official suggested that the FTC might be waiting for the European authorities to announce their decision before proceeding with its own.
In light of the FTC’s postponement, Hanwha Group has called off its takeover celebration ceremony for DSME, initially scheduled for April on Geoje Island, South Gyeongsang Province, and put on hold its plan to rebrand DSME as Hanwha Ocean.