Korea Shipbuilding & Offshore Engineering's (KSOE) $2 billion merger with Daewoo Shipbuilding & Marine Engineering (DSME) looks set to be derailed by European Union antitrust regulators.

The EU has reached a consensus to block the merger, according to a The Korea Times report cited by Tradewinds, a sister publication of Upstream.

The two shipyard giants have made several submissions to address concerns over fair competition in the markets for large container ships, tankers, liquefied natural gas and liquid petroleum gas carriers.

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EU member states are concerned that the deal may not ensure fair competition in the profitable LNG shipbuilding sector, according to The Korea Times.

KSOE is a sub-holding company of the Hyundai Heavy Industry group’s shipbuilding and offshore business.

Daewoo and Hyundai yards have 91 LNG carriers on order, around 60% of the total orderbook, according to VesselsValue.

A Hyundai executive told TradeWinds that his company had not received any official rejection notification from the EU.

"We understand that [the EU] are still reviewing our proposal and we are hoping to hear from them before the year end," he said.

KSOE is likely to abort the merger plan if the EU rejects the proposal, an industry source told TradeWinds.

KSOE plans to take a 55.72% stake in Daewoo, which could transform the company into the world’s largest shipbuilder with a market share of more than 20%.

However, the plan needs approval from other countries and to date only China, Kazakhstan and Singapore have given it their blessing.

KSOE is also awaiting approval from domestic authorities as well as those in shipbuilding rival Japan.

(This article first appeared in Upstream’s sister renewable energy publication Recharge on 18 November 2021.)