Seoul: 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.

According to Yonhap News Agency, the Fair Trade Commission (FTC) reviewed the merger and stock purchase plan involving Lotte Chemical Corp., Lotte Daesan Petrochem Corp., HD Hyundai Oilbank Co., and HD Hyundai Chemical Co. The FTC has approved the plan on the condition that there is a limitation on price increases. Under this plan, HD Hyundai Chemical will merge with Lotte Daesan Petrochem, while Lotte Chemical will acquire shares in the newly integrated HD Hyundai Chemical.

As a result of the merger, both HD Hyundai Oilbank and Lotte Chemical will each hold a 50 percent stake in HD Hyundai Chemical. The FTC noted that this merger would decrease the number of corporate players in the market, thereby limiting competition in the local low-density polyethylene (LDPE) and ethylene-vinyl acetate (EVA) markets.

To mitigate concerns related to reduced competition, the FTC has mandated that the companies cap any changes in domestic prices for LDPE and EVA over the next five years, aligning them with the range of export prices. This plan forms part of the companies' self-rescue strategy, as the sector faces challenges from a supply glut and declining price competitiveness compared to Chinese competitors.