EU clears “France LNG” shipping acquisition

Mergers, acquisitions and certain joint ventures (so-called “concentrations”) in the maritime/shipping sector require pre-clearance on competition grounds by the European Commission before they may be implemented.

If the turnovers/value of sales of the businesses, known as “undertakings”, involved in the deals exceed the thresholds specified in the European Union’s Merger Control Regulation i.e. Regulation 139/2004, then the proposed transaction must be notified to, and cleared by, the European Commission before it may be implemented. (The value of the assets or the market shares are not taken into account in deciding whether a notification is needed or not.)

The European Commission tests a notified deal to see whether it would “significantly impede effective competition” – the SIEC Test.

The Merger Control Regulation applies irrespective of the nationality, domicile or registered seat of the businesses.  So, the Commission may block deals involving non-EU entities – as it did in 2022 when it blocked the acquisition of Daewoo Shipbuilding & Marine Engineering by Hyundai Heavy Industries Holdings – both undertakings being from South Korea – which related to the building of large LNG carriers (so-called LLNGCs).

However, not every deal in the LNG maritime sector is doomed.

On 8 October 2024, the Commission cleared the acquisition of joint control of France LNG Shipping SAS by Ocean Yield AS, Geogas Maritime SAS, Nippon Yusen Kabushiki Kaisha (NYK) and Marigold ACP SARL.

This was Case M.11652.  It mainly concerns the liquefied natural gas maritime transport market.

The Commission decided that the proposed acquisition would not raise competition concerns given the companies' limited market positions resulting from the transaction.

The transaction was examined, as many shipping M&A deals are, under the EU’s simplified merger review procedure which applies when deals involve parties with limited market shares.

For further information in relation to this topic, please contact Dr Vincent Power, Partner, or any member of the EU, Competition & Procurement group.

Date published: 10 October 2024