EU competition officials are preparing to block a $2 billion merger between two of the worlds biggest shipbuilders in South Korea - Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries - the first time since 2019 that Brussels has decided to veto a corporate tie-up, reported
the Financial Times.

The proposed merger between the two Korean shipping giants would be stopped citing it as anti-competitive and the decision is likely to be announced this week, said the report, citing three people familiar with the matter. The European Commission declined to comment.

The veto will be the first by the EUs competition authorities since Brussels prevented a tie-up between Indias Tata Steel and Germanys Thyssenkrupp more than two years ago over concerns it would drive up prices for consumers.

The latest decision comes as energy prices have soared in Europe this winter, with freight costs for liquefied natural gas in Asia rising to record levels of more than $300,000 per day on surging global demand. This merger move is likely to impact the EU as it is the worlds third-largest importer of LNG.

The two South Korean companies dominate the market for making ships that carry super-chilled LNG.

One EU official said blocking the merger would help protect European consumers from paying higher prices for LNG, which emits less carbon dioxide than coal but is still a source of greenhouse gas emissions, said the FT report.

Ships carrying LNG to Asia have been rerouted to Europe, where consumers are willing to pay a premium for the fuel to generate electricity.

The proposed tie-up was first announced by Hyundai Heavy in 2019. Brussels had demanded that the companies provide remedies to limit concerns about preserving competition, the report stated.

The South Korean shipbuilders are significant suppliers to EU companies and represent about 30 per cent of global demand for cargo vessels, according to the commission, it added.

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