Korea Offshore & Shipbuilding Engineering's (KSOE) $2bn merger with Daewoo Shipbuilding & Marine Engineering (DSME) looks set to be derailed by European Union antitrust regulators.

The EU has reached a consensus to block the merger, The Korea Times reported.

This is despite the submission of several solutions to address concerns over fair competition in the markets for large container ships, tankers, LPG and LNG carriers.

EU member states are concerned that the deal may not ensure fair competition in the profitable LNG shipbuilding sector, the newspaper reported.

DSME and Hyundai yards have 91 LNG carriers on order, around 60% of the total orderbook, according to VesselsValue.

An HHI executive told TradeWinds that his company had not received any official rejection notification from the EU.

"We understand that they [the EU] are still reviewing our proposal and we are hoping to hear from them before the year end," he said.

KSOE is likely to abort the merger plan if the EU rejects the proposal, an industry source told TradeWinds.

KSOE plans to take a 55.72% stake in DSME, which could transform the company into the world’s largest shipbuilder with a market share of more than 20%.

However, the plan needs approval from other countries and to date only China, Kazakhstan and Singapore have given it their blessing.

KSOE is also awaiting approval from domestic authorities as well as those in shipbuilding rival Japan.