The European Commission has launched an in-depth investigation into the planned merger of service companies Saipem and Subsea7 due to concerns about market competition.

The proposed merger, announced in July last year, involves the creation of a new company, Saipem7, which will operate and implement projects in more than 60 countries. As a result of the merger, a company will be formed with a combined order portfolio worth €43 billion ($50.5 billion), jointly owned by the shareholders of both companies on an equal basis.

The European Commission has expressed concern that the merger could significantly impact competition in certain offshore engineering and construction service markets. The main worries relate to a potential reduction in competition in the already concentrated subsea infrastructure market, including subsea cables, risers, and pipelines, as well as in carbon capture and storage (CCS) projects.

A preliminary investigation indicated that the deal could further reduce competition in the highly concentrated SURF (Subsea Umbilicals, Risers, and Flowlines) services market for oil and gas and CCS projects. There is also a risk of losing significant competition in the SURF services market, which could lead to higher prices and slower innovation.

The Commission will also examine whether the deal could cause competition issues in other markets, including main pipeline construction services and the decommissioning of outdated subsea infrastructure.

The European Commission's investigation follows a recent review by Australian antitrust authorities. A final decision on the merger is expected by November 26.