The National Assembly on Tuesday passed revised antitrust bills that scaled back the scope of rules and regulations governing business transactions between family-run conglomerates and their subsidiaries.
This move comes after the private sector raised concerns that the government’s toughened stance against chaebol may adversely affect business confidence.
Deputy Prime Minister and Finance Minister Hyun Oh-seok previously said that the government would refine some of its policies and regulations to prevent any negative side effects from its regulatory enforcement.
Lawmakers on the National Assembly’s National Policy Committee and officials from the antitrust agency held a series of talks to further soften the government’s proposed amendments on laws governing transactions between conglomerates and their subsidiaries.
The government initially proposed to reform and overhaul market practices of conglomerates that mostly outsource or transfer their key business operations to their subsidiaries instead of awarding them via open bids.
It sought to amend the laws as part of so-called “economic democratization” aimed at promoting fairer competition and apply stricter regulations against “all” conglomerates transacting business with their subsidiaries or affiliates.
However, FTC officials and lawmakers have reached an agreement to scale down the legislative amendment and enforce laws governing only transactions between conglomerates and subsidiaries in which chaebol owners and their families directly hold shares.
This would still be in line with its economic democratization to prevent owners and their families from misusing their corporate assets for their personal benefit.
Of more than 1,760 subsidiaries and affiliates under 62 groups in the country, chaebol chiefs and their family members own shares in 417 units.
The FTC will oversee some of the 417 units transacting with their parent groups or other affiliates under the revised law.
The exact number of group units that would fall under regulatory oversight in terms of chaebol families’ equity ownerships will be decided via an executive order of the president.
Also, the FTC will exempt conglomerates and units from regulatory enforcement in cases, for example, where parent companies had no choice but to outsource operations to their subsidiaries due to security, efficiency and emergency.
Other measures aimed at taming chaebol that were introduced included pushing chaebol owners to be more responsible, as well as prohibiting conglomerates from expanding through new cross-shareholdings.
These moves were not aimed at hindering business growth but to abolish a vicious circle of wrongdoings by large businesses and their suppliers losing out in transactions with conglomerates, the government said.
By Park Hyong-ki (
hkp@heraldcorp.com)
