Arms procurement agency paves way for Hanwha-DSME acquisition

The Korea Times

The Korea Times

Business

Tue, September 26, 2023 | 09:18

Companies

Arms procurement agency paves way for Hanwha-DSME acquisition

Posted : 2023-04-11 14:13

Updated : 2023-04-12 15:44

Korea's first 3000-ton-class Dosan Ahn Chang-ho submarine is on display at a launching ceremony at Daewoo Shipbuilding & Marine Engineering's shipyard on Geoje Island, South Gyeongsang Province, in this September 2018 file photo. Korea Times file

By Park Jae-hyuk

The Defense Acquisition Program Administration (DAPA) told the Fair Trade Commission (FTC) last week that Hanwha Group's acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) will not restrict competition in the warship market, according to government officials, Tuesday.

The state arms procurement agency's opinion is expected to prompt the antitrust regulator to speed up its review of the conglomerate's plan to take over the shipbuilder.

After Hanwha decided to buy DSME from the state-run Korea Development Bank (KDB), the shipbuilder's rivals raised concerns about the possibility of the conglomerate monopolizing the nation's warship market by taking advantage of its status as the sole supplier of defense systems for warships.

As a result, the FTC asked the DAPA to review the reasonability of their concerns.

Hanwha has therefore not been able to get approval for its acquisition of DSME from the Korean government, while the antitrust authorities of other countries gave the green light to the deal. Earlier this month, Hanwha even received unconditional approval from the European Commission, which had vetoed HD Hyundai's previous attempt to acquire DSME in 2022.

Industry officials anticipate that the FTC may also give unconditional approval, based on the opinion of the DAPA. The antitrust regulator was initially expected to give conditional approval, asking Hanwha to take measures to prevent the supply of its defense systems to DSME's rivals for higher prices.

The FTC emphasized that it has gone all out to finish its review as soon as possible, considering the significance of Hanwha's acquisition of DSME.

While the FTC has delayed its decision, however, it has faced growing protests from both Hanwha and DSME, as well as politicians and residents of Geoje Island in South Gyeongsang Province, where the shipbuilder's shipyard is located.

A civic group based on Geoje Island held a press conference on Monday to urge the FTC to immediately approve the deal.

"The FTC should respond to the suspicion that DSME's rivals have intentionally interrupted the review of the merger deal," the civic group said at the press conference.

The group also plans to hold a rally on Wednesday in front of the FTC headquarters inside the Sejong Government Complex.

pjh@koreatimes.co.kr