South Korea’s antitrust regulator has conditionally approved Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) Co., as widely expected, clearing the way for the conglomerate to complete the deal.

The Fair Trade Commission (FTC) on Thursday announced its approval of the takeover, subject to corrective measures against potential anti-competitive behavior by five Hanwha Group companies, including Hanwha Aerospace Co., that agreed to acquire a controlling 49.3 percent stake in DSME that builds warships and submarines in addition to commercial ships.

With all eight countries, including South Korea, having approved the merger, Hanwha’s M&A deal is expected to be completed in the middle of next month.

As per the conditions set forth by the FTC, Hanwha and DSME should comply with non-disclosure obligations and do business in a non-discriminatory manner to rivals for three years and report on their compliance with these obligations to the FTC.

The corrective measures aim to prevent unfair pricing discrimination, requests for technical information related to components and provide competitor trade secrets to Hanwha affiliates. In connection with surface ships and submarines tenders ordered by the Defense Acquisition Program Administration, these measures will be applied to the contracting market where 10 ship parts, including ship navigation systems, ship combat systems, guns, and launchers for ships, where Hanwha Group has a market share of more than 50 percent and such parts are purchased directly by a shipbuilder.

The compliance period for these measures is three years, and Hanwha and DSME will be required to report their compliance with the corrective measures to the FTC every six months. The FTC plans to consider whether to extend the reporting period further after three years, considering market and institutional changes.

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]