Lee & Ko Secures Unconditional Approval for Hanwha Impact’s Acquisition of HSD Engine Across Multiple Jurisdictions

Lee & Ko’s Antitrust & Competition Practice Group secured unconditional approval from competition authorities in South Korea, China, and Vietnam for Hanwha Group’s acquisition of global ship engine manufacturer, HSD Engine.

The acquisition was expected to face challenges in the merger review process due to the vertical integration between one of the largest global shipbuilding companies (Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering) and HSD Engine, a leading ship engine manufacturer. However, Lee & Ko’s Antitrust & Competition Practice Group utilized deep industry knowledge and expertise in merger control to achieve a successful outcome.

Given that Hyundai Heavy Industries, the top domestic engine manufacturer, had already achieved vertical integration with its shipbuilding affiliates, competition authorities (especially the Korea Fair Trade Commission) raised concerns about the fact that this transaction would further vertically integrate HSD Engine, the second-largest domestic ship engine manufacturer, with Hanwha Ocean. To address such concerns, Lee & Ko’s Antitrust Team provided detailed explanations on the structure of the shipbuilding and ship engine markets, relevant regulations, and persuaded the competition authorities that the merger would not create anticompetitive concerns.

A critical issue was whether other domestic shipbuilders would face difficulties in procuring ship engines following the merger. Lee & Ko’s Antitrust & Competition Practice Group conducted an extensive analysis of market structures, transaction processes, market competition, business performance, and production capacities, and thoroughly demonstrated that the merger would not foreclose other domestic shipbuilders from securing ship engines.

Moreover, the merger was subjected to a rigorous review in China, a pivotal market with numerous shipbuilding and ship engine companies. Lee & Ko’s Antitrust & Competition Practice Group effectively addressed various inquiries from the Chinese competition authorities, which successfully lead to a swift and straightforward approval.

The smooth approval of the merger enables Hanwha Group and HSD Engine to achieve synergy from the transaction. As a result of the successful handling of this case by Lee & Ko’s Antitrust & Competition Practice Group, the competitive edge of domestic companies in the global shipbuilding and ship engine market is expected to be enhanced.