Hyundai, one of the world’s largest shipbuilders, announced the deal in 2019 in part to tackle overcapacity in the industry.
The shipbuilder, which sought EU antitrust approval for the Daewoo takeover in November 2019, said it could challenge the EU ban and criticized the regulator’s emphasis on the market share.
South Korea’s industry ministry said it regretted the EU’s decision on a deal already approved by China, Singapore and Kazakhstan.
The European Commission said the deal would create the world’s largest shipbuilder, with a combined market share of at least 60%, leaving few other suppliers for customers.
The European competition enforcement authority said the takeover would reduce competition in the global market for building large liquefied natural gas (LNG) carriers. She also said the two companies had not made a formal offer with remedies to address competition concerns.
According to the EU, demand for large LNG carriers has not been affected by the Covid-19 pandemic, while the outlook for future demand is very good.
Reuters wrote on Dec. 10 that the deal will be blocked by the EU executive.
“As no remedies were filed, the merger would have resulted in fewer suppliers and higher prices for large LNG carriers, which is why we have banned the merger,” said Margrethe Vestager, Head of of the EU antitrust, in a press release.
It is the first veto used by the European Commission on a merger, after it blocked plans by Thyssenkrupp and Tata Steel to form a joint venture in 2019, fearing the deal would raise prices and cut competition.
