DSME and KSOE merger gets the nod from Singapore's competition authority
The Competition and Consumer Commission of Singapore (CCCS) has cleared the proposed merger between two South Korean shipyards, Korea Shipbuilding & Marine Engineering Co (KSOE) and Daewoo Shipbuilding & Marine Engineering (DSME)
The Competition and Consumer Commission of Singapore (CCCS) has cleared the proposed merger between two South Korean shipyards, Korea Shipbuilding & Marine Engineering Co (KSOE) and Daewoo Shipbuilding & Marine Engineering (DSME).
CCCS said it was unable to conclude in its in-depth review that the proposed merger will not result in a substantial lessening of competition that would become detrimental to customers in Singapore.
'The parties overlap in the global supply of commercial vessels, including oil tankers, containerships, LNG carriers and LPG carriers,' CCCS stated.
The CCCS assessment states that barriers to entry and expansion are generally high, customers have buyer power to constrain the merged entity from exercising its market power, and the two parties are close competitors to each other particularly in the 200,000 dwt ultra-large VLCC and 40,000 cubic metre LNG carrier markets, reports Colchester's Seatrade Maritime News.
'While market concentrations in the relevant markets will be high post-merger, the evidence does not indicate that the proposed transaction will result in coordination or collusion on prices as shipbuilders tend to have private negotiations with customers, which limit price transparency. Shipbuilders may also find it difficult to coordinate on prices as customers perceive differences in quality and experience of shipbuilders,' CCCS wrote.
'After evaluating all the evidence available, CCCS assessed that the proposed transaction, if carried into effect, will not lead to a substantial lessening of competition in Singapore.'
The proposed shipyards' merger still requires clearance from the European Commission (EC). Due in part to delays as a result of the coronavirus (Covid-19) pandemic, the EC's decision has been postponed.