Union to join EU review on HHI-DSME merger
In this Feb. 27, 2019, photo, members of Daewoo Shipbuilding & Marine Engineering's (DSME) union stage a protest on Yeouido in Seoul to oppose Hyundai Heavy Industries' acquisition of DSME. Korea Times photo by Bae Woo-han
By Nam Hyun-woo
The Korean Metal Workers' Union (KMWU) will participate in a European Commission investigation on the planned acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) by Korea Shipbuilding & Offshore Engineering, the holding firm of Hyundai Heavy Industries (HHI), according to industry officials, Thursday.
Since the KMWU and its DSME chapter are opposing the proposed M&A deal, their participation into the investigation is expected to affect HHI's campaign of winning approval on the acquisition from six countries.
According to the KMWU, it has recently received an official letter from the European Commission approving KMWU President Kim Ho-gyu to join the investigation as a “third party.” This will allow the KMWU to access some “confidential data” relevant to the merger and raise its opinion during upcoming hearing sessions.
Since December last year, the European Commission has been investigating the proposed acquisition ― keeping DSME under Korea Shipbuilding & Offshore Engineering ― because their monopolistic status in building very large crude carriers (VLCCs) and LNG carriers could impede fair competition between shipbuilders.
Along with the European Commission, competition authorities in five countries ― Korea, Japan, China, Kazakhstan and Singapore ― are either reviewing or have already reviewed the proposal. If HHI fails to gain approval from any of those authorities, the merged firm will be prevented from operating in the disputed country, thus leaving no reason for the company to pursue a merger.
The KMWU and the DSME chapter claimed it will harm the Korean shipbuilding industry and result in a massive layoff of both DSME and HHI employees. Union members staged multiple strikes when DSME chapter head Shin Sang-ki last year visited IndustriALL Global Union executive committee in Belgium to draw out the organization's resolution on the deal.
Though it won a right to take part into the investigation, the KMWU is in a cautious stance, worrying over the “unfair criticism” that workers are eager to jeopardize the deal.
“We are trying not to put excessive emphasis on joining the investigation,” a KMWU official said. “In Europe, unions' participation in the investigation of such an M&A deal is oftentimes taken as granted, and we also believe this is a right that belongs to workers.”
The European Commission is scheduled to make its final decision on the deal by Sept. 3. Industry officials remain cautious in predicting the commission's decision as the commission said in a statement that there are “concerns that the proposed transaction may remove DSME as an important competitive force in the markets of large containerships, oil tankers, LNG and LPG carriers.”
In an interim report it delivered recently, the commission also said it will take a closer look on HHI's and DSME's market share in LNG vessels. The two companies' combined share in the LNG vessel market stands at 60 percent.