The Korea Fair Trade Commission (KFTC) recently announced that it has completed a three-year compliance review of Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering (now Hanwha 0cean), and found that the original risks of market monopolization still exist. Since the acquisition was completed, the market concerns that had previously been raised have not been resolved on their own, and the competitive environment has not been restored.
Therefore, the KFTC has decided to extend several restrictive regulatory measures on multiple companies under the Hanwha Group, a first in South Korean antitrust history. The committee decided to extend the existing restrictions on the Hanwha Group companies for another three years, until May 2, 2029, and stated that a compliance review will be conducted subsequently. If the risk of market monopoly persists, a further two-year extension is not ruled out.
It is understood that this restriction was originally intended as an additional constraint on Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering (now Hanwha 0cean) in 2023. At that time, the Korea Fair Trade Commission believed that Hanwha Group’s combination of its shipbuilding business with its military support systems business could create an unfair advantage or monopolistic element, especially in the defense shipbuilding sector.
KFTC stated that after Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering in 2023, Hanwha Group’s market share in the surface ship and submarine sector may exceed 60%. Hanwha Group’s subsidiaries, Hanwha Aerospace and Hanwha Systems, are already leading suppliers of core equipment for naval vessels, supplying their products to both Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) and competing shipyards.
In light of this, KFTC expressed concern that Hanwha Group’s acquisition of Daewoo Shipbuilding & Marine Engineering would increase the likelihood of Hanwha implementing discriminatory pricing and internal information sharing, thereby putting competitors at a disadvantage in future project bidding.
To complete the acquisition, Hanwha Group committed in 2023 to accept several restrictive measures, such as: prohibiting discriminatory pricing for marine equipment, prohibiting unfair refusal to provide technical information related to marine equipment, and prohibiting the disclosure and sharing of competitors’ trade secrets.
The KFTC assessment concluded that Hanwha Group maintains a significant competitive advantage in bidding for shipbuilding contracts and its eight major marine equipment sectors. Therefore, all the aforementioned restrictions remain in effect. However, the committee believes that measures are no longer necessary for ship identification friend or foe (IFF) systems and integrated marine mechanical control systems, as new suppliers have emerged in these two market segments.
This extension of regulatory measures comes at a critical juncture as Hanwha Group continues to expand its market share in key sectors such as defense shipbuilding and core support equipment. The group has announced plans to invest in the Australian defense shipbuilder Austal and is pursuing several investments in the United States, including the acquisition of the Philly Shipyard, with the aim of integrating its shipbuilding, electronics, and core support system technologies to capitalize on market opportunities.