The nation’s chief antitrust regulator reiterated his stance of skepticism toward calls for the revival of a ceiling on equity investment by big business groups at a forum in Seoul on Thursday.
The remarks of Fair Trade Commission chairman Kim Dong-soo come while a group of opposition lawmakers are issuing the necessity of more rigidly regulating the conglomerate sector by reintroducing the equity investment ceiling.
While some lawmakers argue the government should restrict conglomerates from investing in other companies in excess of a certain percentage of their net asset worth, the FTC chairman downplayed the efficacy of the investment cap.
“We need to review whether the investment ceiling had been effective in preventing excessive wealth concentration to a small number of major business groups,” he said.
The ceiling was first introduced here in 1987 in order to prevent reckless business expansion by family-controlled business groups.
The restraint was scrapped in March 2009 under the business-friendly Lee Myung-bak administration.
According to FTC officials, Kim’s position is that the equity investment ceiling system is an analog method that does not reflect the global management environment and the traits of individual companies.
“It is a natural economic phenomenon to see a company’s size and the number of the parent company’s business units usually expand when the economy grows,” Kim had said.
He also said policymakers and lawmakers need to diagnose the exact root cause for problems with conglomerates and come up with the right prescription rather than talk about the size of businesses.
He added that decisions related to investment or business diversification should be made by conglomerates themselves, which have to compete not just with domestic companies but also powerful foreign rivals.
Over the past few years, opposition lawmakers continued to claim that it is inevitable for negligent supervision on the conglomerate sector to tend to bring about a series of irregular business practices.
Conglomerates including Samsung Group had enjoyed a favorable investment environment thanks to the “business-friendly” policy of the Lee Myung-bak administration, according to market observers.
“But now they are alert over the possible revelation of their misdeeds amid the president’s lame-duck status,” a research analyst said.
By Kim Yon-se (
kys@heraldcorp.com)
