CCCS raises competition concerns on proposed merger of S Korean shipbuilders
Feedback suggests that the parties are currently two of the largest suppliers for the global supply of LNG carriers, and possibly large containerships and large oil tankers.
THE Competition and Consumer Commission of Singapore (CCCS) has raised concerns on the proposed merger of two South Korean shipbuilders.
This follows its completion of the first phase review of the proposed acqusition by Korea Shipbuilding & Offshore Engineering Co Ltd (KSOE) of a majority interest in Daewoo Shipbuilding & Marine Engineering Co Ltd (DSME) and the intended integration of their businesses.
Both companies operate here as foreign companies registered in Singapore.
In a release issued on Friday, CCCS said that it has raised competition concerns with KSOE on the proposed transaction, based on information furnished by KSOE and feedback from third parties, including customers and other competing suppliers of commercial vessels.
"Third-party feedback suggests that the parties are currently two of the largest suppliers for the global supply of LNG (liquefied natural gas) carriers, and possibly large containerships and large oil tankers.
"There are concerns that the proposed transaction will remove competition between two main suppliers of these commercial vessels, to the detriment of customers in Singapore," CCCS said.
Feedback also revealed worries on whether alternative suppliers will be sufficiently strong competitors to the merged entity. Moreover, there are concerns that the barriers to entry and expansion, particularly in relation to more sophisticated vessels such as LNG carriers, may be high, the commission added.
On Sept 12, 2019, CCCS accepted an application from KSOE for a decision on whether the proposed deal infringes section 54 of the Competition Act (Cap 50B), which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore. KSOE and DSME overlap in the supply of commercial vessels, including oil tankers, containerships, LNG carriers and liquefied petroleum gas (LPG) carriers.
At this stage, KSOE and DSME may offer commitments to address the potential competition concerns that may arise as a result of the transaction, or the merger will proceed to a detailed Phase 2 review upon CCCS's receipt of the relevant documents from KSOE. "Commitments may also be offered at any time during a Phase 2 review," the commission added.
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