The Korea Fair Trade Commission (KFTC) has officially commenced its review of the merger between Lotte Chemical and HD Hyundai Oilbank, which is part of a restructuring of the petrochemical business (DaeSan No. 1). The authorities have expressed concerns that the merger may restrict market competition and have submitted a report to the commission following the submission of corrective measures.
On July 15, the KFTC's secretariat announced that it had submitted a report to the commission after the corrective measures were proposed by the parties involved, including Lotte Chemical, Lotte Daesan Petrochemical, HD Hyundai Oilbank, and HD Hyundai Chemical. The review process officially began with the delivery of the report to the parties under investigation.
The merger involves HD Hyundai Chemical absorbing Lotte Daesan Petrochemical, with Lotte Chemical acquiring additional shares in HD Hyundai Chemical, resulting in both companies holding 50% stakes in HD Hyundai Chemical. This arrangement will allow them to jointly operate the naphtha cracking facility (NCC) and related production facilities within the Daesan petrochemical complex.
KFTC officials, after analyzing the application received last November along with market conditions and stakeholder opinions, determined that the merger is likely to significantly limit competition in the domestic low-density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) markets. They noted that the reduction in competitors could facilitate collusion among businesses and increase the likelihood of unilateral price hikes by the merged entity.
In response, the parties under investigation prepared a draft of corrective measures aimed at restoring market competition and subsequently submitted a revised proposal after consulting with experts. The KFTC has suggested a corrective order that includes provisions to prevent competition restrictions.
The final review will take place through a commission deliberation. A KFTC official stated, "We plan to hold a review promptly to conclude the merger examination related to the petrochemical business restructuring DaeSan No. 1. We will also assess the impact on market competition for other petrochemical business restructurings to protect competition in the domestic petrochemical market."
On July 15, the KFTC's secretariat announced that it had submitted a report to the commission after the corrective measures were proposed by the parties involved, including Lotte Chemical, Lotte Daesan Petrochemical, HD Hyundai Oilbank, and HD Hyundai Chemical. The review process officially began with the delivery of the report to the parties under investigation.
The merger involves HD Hyundai Chemical absorbing Lotte Daesan Petrochemical, with Lotte Chemical acquiring additional shares in HD Hyundai Chemical, resulting in both companies holding 50% stakes in HD Hyundai Chemical. This arrangement will allow them to jointly operate the naphtha cracking facility (NCC) and related production facilities within the Daesan petrochemical complex.
KFTC officials, after analyzing the application received last November along with market conditions and stakeholder opinions, determined that the merger is likely to significantly limit competition in the domestic low-density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) markets. They noted that the reduction in competitors could facilitate collusion among businesses and increase the likelihood of unilateral price hikes by the merged entity.
In response, the parties under investigation prepared a draft of corrective measures aimed at restoring market competition and subsequently submitted a revised proposal after consulting with experts. The KFTC has suggested a corrective order that includes provisions to prevent competition restrictions.
The final review will take place through a commission deliberation. A KFTC official stated, "We plan to hold a review promptly to conclude the merger examination related to the petrochemical business restructuring DaeSan No. 1. We will also assess the impact on market competition for other petrochemical business restructurings to protect competition in the domestic petrochemical market."
* This article has been translated by AI.
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