Hanwha Group has acquired over 15% of Korea Aerospace Industries (KAI), prompting the union to express opposition to the merger. The union argues that Hanwha, a supplier in the aviation sector and a competitor in the space sector, could create conflicts of interest in KAI's management.
On August 12, the KAI union issued a statement urging the Fair Trade Commission to reject the merger review of KAI and Hanwha. This follows Hanwha Group's continued acquisition of KAI shares, which reached 15.89% as of August 10, with the stated purpose of 'management participation.'
The union highlighted that Hanwha Aerospace and Hanwha Systems are major suppliers to KAI. They pointed out that Hanwha Aerospace has supplied engines for the T-50 series and signed a contract worth 473.1 billion won for 17 types of components for the KF-21's initial production. Hanwha Systems also supplies avionics for the LAH and KF-21.
The union claims that if Hanwha exerts influence over KAI's management, it could lead to preferential selection of Hanwha products and limit business opportunities for competing suppliers, thereby undermining independent purchasing and supply chain decision-making.
They also emphasized the competitive relationship in the space sector, noting that KAI and Hanwha Systems are competing for the Defense Acquisition Program Administration's (DAPA) synthetic aperture radar (SAR) satellite project, which is set to be announced by the end of the year. The union expressed concerns that Hanwha's management participation could grant access to sensitive competitive information, such as bid prices, project costs, and technology development strategies.
The union referenced a previous merger case between Hanwha and Daewoo Shipbuilding & Marine Engineering, where the Fair Trade Commission imposed corrective measures due to concerns over price discrimination and the potential leakage of trade secrets between suppliers and shipbuilders. They argue that the merger between Hanwha and KAI, which involves both supply and competitive relationships, should be scrutinized even more rigorously.
A KAI union representative stated, 'The aerospace industry is a strategic sector formed through significant national investment and long-term research and development. If the independent competitive structure is compromised, it will be difficult for new entrants to replace it. The most effective way to protect competition is to prevent competitors from participating in each other's management.'
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.