Singapore raises competition concerns on proposed merger of Korean shipbuilders
Topics: SINGAPORE COMPETITION MERGER KOREAN SHIPBUILDER
2 September 2019, CCCS accepted an applicationfrom KSOE for a decision on whether the Proposed Transaction infringes section 54 of the Competition Act (Cap. 50B), which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.
KSOE and DSME overlap in the supply of commercial vessels, including oil tankers, containerships, liquefied natural gas (LNG) carriers and liquefied petroleum gas (LPG) carriers. Both companies operate in Singapore as foreign companies registered in Singapore.
CCCS has raised competition concerns with KSOE on the Proposed Transaction, based on information furnished by KSOE and feedback from third parties.
Third party feedback suggests that the Parties are currently two of the largest suppliers for the global supply of LNG carriers, and possibly large containerships and large oil tankers.
There are concerns that the Proposed Transaction will remove competition between two main suppliers of these commercial vessels, to the detriment of customers in Singapore. Feedback also revealed concerns on whether alternative suppliers will be sufficiently strong competitors to the merged entity.
There are also concerns that the barriers to entry and expansion, particularly in relation to more sophisticated vessels such as LNG carriers, may be high. ■