The Korea Fair Trade Commission (KFTC) applied its antitrust regulations to Maersk like its European and Chinese counterparts did earlier. Multiple countries’ sanctions on Maersk, which is concentrating on corporate hunting these days, and Maersk’s response to the restrictions are likely to increasingly affect the shipping industry of South Korea as well as those of many other countries.
Maersk Line, the world’s largest container shipping company, and Hamburg Sud, which is the seventh-largest shipping company in the world and the second-largest in Germany, signed an acquisition contract in December last year. They are currently seeking approvals for the merger in various countries to complete the procedure before the end of this year.
Hamburg Sud has done business alone without belonging to any shipping conference. The company’s main business areas are between Europe and Africa and between Europe and Latin America. Once the merger is completed, the size of Maersk becomes approximately 11 times that of Hyundai Merchant Marine, the largest container shipping company in South Korea.
By means of the merger, Maersk already achieved its primary goal, that is, more influence in the global shipping market. However, the company is facing antitrust regulations in more and more countries as its market share is rising in multiple shipping routes.
Earlier, the EU told Maersk to reduce its service between Latin America and Europe to obtain the approval. Likewise, the Chinese government told it to reduce its service between the east coast of Latin America and Asia. On November 28, the KFTC told it to withdraw from the consortium regarding the sea route between Far East Asia and the Caribbean Sea and Central America and not to extend its contract period regarding the consortium for the sea route between Far East Asia and the west coast of Latin America. In addition, the KFTC blocked Maersk from joining any other consortium for five years to come.
According to the KFTC, the merger between Maersk and Hamburg Sud can result in information sharing with partner shipping companies on bottoms distribution, transportation schedules, freight charges, and so on. In other words, the KFTC is thinking that the merger between the two can lead to a consortium-wide business combination beyond the two and then competition can be limited by, for example, an increase in freight rates.
Last year, Maersk and Hamburg Sud posted a combined market share of 33.3% in Central America and the Caribbean Sea. However, it jumps to 54.1% when the consortium as a whole is included in the calculation. The market share also rises from 37.6% to 65.9% when it comes to the west coast of Latin America.
As the authorities of various countries are curbing the expansion of Maersk, the company has to carry out fleet integration at least to some extent or withdraw at least some ships. Those container ships can be dispatched to other routes and, as such, the business of rival companies can be highly affected by Maersk’s determination on the new destinations of the ships.