THE European Union (EU) blocked the merger of two South Korean ship-making giants today, over concerns the deal will restrict the supply of large liquefied gas carriers, posing a threat to the energy security in Europe.

The takeover of Daewoo Shipbuilding & Marine Engineering by rival Hyundai Heavy Industries Holdings “will create a dominant position by the new merged company and reduce competition in the worldwide market for liquefied natural gas (LNG) carriers”, said the European Commission.

The veto of the tie up comes two years after Brussels stopped India’s Tata Steel and Germany’s Thyssenkrupp from merging, and three years after it blocked the train-making businesses of Alstom and Siemens from merging, angering France and Germany.

“Given the evidence of negative effects of the merger (and) the absence of remedies, the commission decided to block the merger,” said EU competition chief Margrethe Vestager at a news briefing.

The bloc found that the merged entities will create a group controlling nearly two-thirds of the global LNG cargo ship market and will grow more dominant over time.

The merger comes when energy prices are soaring in Europe, and as the bloc tries to pivot away from its dependence on natural gas from Russia towards other sources, including LNG.

“European customers will be left with few alternatives to the merged entity, only a handful of competitors will remain in the market,” warned Vestager.

“It does not matter where the merging firms are located. What matters is whether they compete for demand in Europe.”

The EU had been notified of the merger of the two of the largest shipyards in the world in November 2019, and opened an in-depth investigation the following month. – AFP, January 13, 2022.