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.
Source
: HKSG.
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