Merger Of The Two Cruise Giants Or Vetoed By The European Union

- Mar 13, 2020-

The European Union could veto the deals of Fincantieri, Italy's two biggest cruise building giants, and chaniers de l'atlantisque, France, because it is difficult to address regulatory monopoly concerns.

Fincantieri must make concessions by this week to address EU concerns, according to Reuters. In general, companies may have to sell assets or transfer key technologies to competitors, but it is not clear what assets or technologies Fincantieri can sell or which company the potential buyer will be.

Fincantieri is hitherto unknown about the novel coronavirus epidemic. The epidemic has hit hundreds of companies around the world. Italy has been particularly hit and has taken an unprecedented nationwide blockade. Fincantieri believes this could weaken the hard line of the European Commission.

A Fincantieri source said: "while waiting to receive official documents, we are facing an epoch-making economic crisis, the impact of which is unknown. The company believes that the European Commission will make a reasonable decision to allow industries to better deal with these problems and reduce the impact of the crisis on employment."

Driven by the French and Italian governments, Fincantieri reached an agreement in September 2017 to gain effective control of the Atlantic shipyard. The Italian government wants the deal to help Fincantieri, Europe's largest shipbuilding group, fend off growing competition from Asia and elsewhere.

However, the European Commission believes that in such a highly concentrated market with limited production capacity, the acquisition agreement between the two global leading enterprises may push up the cruise price. The European Commission announced on October 30 last year that it would begin an antitrust investigation into Fincantieri's acquisition of the Atlantic shipyard.

According to EU regulators, Fincantieri's acquisition of Atlantic shipyard will reduce the number of competitors in European cruise construction market from three to only two, which will seriously affect the competition within the EU.

According to the data, at present, Fincantieri's orders account for about 37% of the total global orders (in terms of gross tonnage), while Atlantic shipyards account for 21%. As a result, once combined, the share of both parties will reach nearly 59%. By contrast, its main competitor, Meyer werft shipyard in Germany, accounted for about 28.8% of the orders.

The European Competition Commission is expected to decide on April 17 whether to approve the deal. If Fincantieri does not give in, the merger could be difficult to get approval from the European Commission.

Last year, Fincantieri said in response to EU queries that a failed merger would affect industry employment. Giampiero massolo, chairman of Fincantieri, said at the time: "our combined project is an effective industrial project, which can not only help the European shipbuilding industry to compete better in the global scope, but also generate immediate economies of scale and support technological progress in this field. This will protect European consumers. I don't think we should underestimate the impact of layoffs in Europe on shipbuilding employment. The European Commission will take responsibility for this. "