[THE INVESTOR] The nation’s fair trade authorities said Thursday it would ease a key regulation to ban excessive expansion of conglomerates by raising the asset ceiling for its conglomerate watch list for the first time in seven years.
In an economy-related ministers meeting held in Seoul, the Fair Trade Commission said it would boost the minimum asset criteria to 10 trillion won ($8.65 billion) from 5 trillion won.
Fair Trade Commission in Sejong City (Yonhap)
Mobile messaging giant Kakao and bio drugmaker Celltrion will benefit from the move, being delisted from the conglomerate watch list for 2016, market watchers said.
In addition, the new FTC ruling for the conglomerate watch list would exclude state-run giants like Korea Electric Power Corp. and Korea Land & Housing Corp.
As a result, from September, 28 big business groups will face restrictions in their business expansion, affected by the FTC ruling, which keeps big business groups from making equity investments or offering loan guarantees among affiliates.
Previously, the number of big business groups subject to FTC surveillance was 65.
“The 37 excluded big business groups will benefit from the eased regulation on business expansion. They will be able to promote and expand new businesses more easily as they will be exempted from investment restrictions and other legal barriers,” the watchdog said in a statement.
The antitrust body has sought the eased ruling since the newly joined big business groups like Kakao and Celltrion pointed out the unfairness in facing equal regulations to them, applied for longtime members like Samsung and Hyundai.
The big business associations like the Federation of Korean Industries and the Korea Chamber of Commerce and Industry hailed the eased ruling on conglomerates, while civic group raised concerns over a possible power abuse of conglomerates dropped out of the list.
“It is time for the FTC to consider applying a different standard for regulating power abuse of conglomerates by industry rather than a uniformed standard,” Wi Pyung-yang from Solidarity for Economic Reform said.
“For instance, the lower asset ceiling is needed to designate big business groups in the retail sector and venture firms-led new industries than other manufacturing sectors to protect small and medium-sized players.’’
When it comes to the renewed FTC conglomerate watch list, Samsung Group is tops the list with its 59 affiliated units having combined assets of 348.2 trillion won, followed by Hyundai Motor Group with 209.7 trillion won.
The watch list was introduced in 1987 with the aim of preventing excessive economic power concentration in conglomerates and their affiliates, which have hampered the continued growth of SMEs and the budding of start-ups in Korea.
By Seo Jee-yeon (firstname.lastname@example.org)