DSME acquisition approved by Korea with conditions

A crane at Daewoo Shipbuilding and Marine Engineering (DSME)'s shipyard in Geoje, South Gyeongsang. [YONHAP]

Korean antitrust regulator approved the acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) on the condition that the parties won’t engage in anticompetitive activities in military shipbuilding.

The Fair Trade Commission finalized its monthslong review on Thursday, becoming the last regulator to give a green light — albeit subject to remedies — to the $1.5 billion proposal after approvals in seven jurisdictions.

By getting a nod from all necessary antitrust authorities, the takeover deal is expected to be completed as early as next month.

The acquisition involves five Hanwha companies — Hanwha Aerospace, Hanwha Systems, Hanwha Impact Partners, Hanwha Energy Singapore and Hanwha Convergence — acquiring a 49.3 percent stake in DSME. The FTC has been scrutinizing the acquisition due to concerns about potential competition restrictions as some of the acquiring companies are parts suppliers to military shipbuilders like DSME.

To address these concerns, the FTC instituted remedies designed to prohibit Hanwha Aerospace, Hanwha Systems and DSME from engaging in unfair practices.

The regulator ordered the combined units not to be involved in discriminatory pricing for equipment used in military ships. They are also required to equally provide product information to all parities including competitors of the acquiring company. They are also banned from transferring trade secrets of competing companies with each other.

The defense and shipbuilding companies must comply with these corrective measures for three years and report their progress to the FTC every six months.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]