The Korea Fair Trade Commission said on the 28th it will extend by three years the compliance period for corrective measures imposed when Hanwha and Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) combined. It said concerns about restricting market competition have not been resolved.
Hanwha, which filed for a business combination with Daewoo Shipbuilding & Marine Engineering in 2022, passed the Korea Fair Trade Commission (FTC)'s merger review in 2023. However, the FTC determined that if the two companies combine, their market share in the surface vessels and submarines market would exceed 60%, raising the possibility of a monopoly if they come under one group. It also saw concern that Hanwha Aerospace and Hanwha Systems, which are acquiring Daewoo Shipbuilding & Marine Engineering, could restrict competition by discriminating on component prices and other terms against warship builders that compete with Daewoo Shipbuilding & Marine Engineering.
Accordingly, the FTC approved the business combination on the condition that three corrective measures be implemented for three years. The measures are a ban on unfair discriminatory offers of quoted prices for ship components, a ban on unfair refusals of requests for technical information on ship components, and a ban on providing competitors' trade secrets to affiliates.
The FTC extended the compliance period by three years. That is because Hanwha Aerospace and Hanwha Systems still hold monopolistic-level high market shares in eight of 10 ship component markets. Under the reconsideration conditions specified in the FTC's decision at the time of approving the business combination, the FTC may extend the compliance period.
The FTC decided to end the corrective measures for identification friend or foe equipment for ships and for the integrated machinery control system market for ships, judging that concerns about competition restrictions from the business combination have subsided due to the entry of new players. For the remaining eight ship component markets, it extended the compliance period for the corrective measures by three years and allowed an additional extension of up to two years depending on future market conditions.