Corporate & Securities Law

South Korean Merger Control Amendments

By Manfred Gabriel

In June, the Korean Executive Branch approved amendments to the merger control regime (called Monopoly Regulation and Fair Trade Law or MRFTL), which went into effect yesterday, July 1. Here is a summary:

1. Increase of the Size Threshold for Business Group Designation

• The size threshold for the “Business Group” designation under the MRFTL will increase from KRW 2 trillion to KRW 5 trillion.
• The increase of this threshold is expected to reduce the number of companies subject to the restrictions on cross-investment and guarantee applicable to the Business Group.
• The number of companies subject to the Business Group restrictions is expected to be reduced from 79 to 41 due to the amendment that intends to improve flexibility in managing business groups of a smaller scale.

2. Increase of the Asset or Threshold for Business Combination Filing Obligation

• Currently, one of the conditions to trigger a filing obligation in Korea is that one of the involved parties should have assets or sales in the amount of KRW 100 billion or more and the other party should have assets or sales in the amount of KRW 20 billion.
• Since this KRW 100 billion threshold has not been revised since 1997, the amendment this time increases it to KRW 200 billion.
• The Korean FTC expects that the number of transactions requiring a business combination report filing would decrease by 33% once the amendment takes effect and that smaller-sized companies would be relieved from the burden of preparing and submitting a business combination filing, while more in-depth analysis is expected for the transactions that have been filed.

HT to J.W. Hyun at Kim & Chang.

Full post as published by Antitrust Review on July 02, 2008 (boomark / email).