Petrochemical sector merger plan conditionally approved under gov’t-led restructuring

The antitrust watchdog said Thursday it has conditionally approved a merger plan under the government-led program to restructure the local petrochemical industry, which has been suffering a prolonged downturn.

The Fair Trade Commission (FTC) said it reviewed the merger and stock purchase plan involving Lotte Chemical, Lotte Daesan Petrochem, HD Hyundai Oilbank and HD Hyundai Chemical and approved it on condition that price increases be limited.

Under the plan, HD Hyundai Chemical will merge with Lotte Daesan Petrochem, while Lotte Chemical will acquire shares in the integrated HD Hyundai Chemical.

Consequently, HD Hyundai Oilbank and Lotte Chemical will each hold a 50 percent stake in HD Hyundai Chemical.

The FTC said the merger would reduce the number of corporate players and limit competition in the local low-density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) markets.

To address concerns over reduced competition, the FTC ordered the companies to cap changes in domestic prices for LDPE and EVA over the next five years based on the range of export prices.

The plan was part of the companies' self-rescue plan and comes as the key sector is suffering from a supply glut and a decline in price competitiveness vis-a-vis Chinese rivals.

Yonhap